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Form 5472 penalty exposure calculator
A foreign-owned single-member LLC files Form 5472 with a pro forma Form 1120 every year, even with no income. The penalty for a missed or late form is $25,000, and it keeps growing after the IRS writes to you. This shows the number, and what usually happens next.
- Built by a team of Certified Accountants, CPAs and Enrolled Agents
- 2026 figures
- Estimate only, not advice
Estimate only. The statutory penalty is $25,000 per Form 5472 per year, plus $25,000 for each 30-day period (or part) that the failure continues after 90 days from an IRS notice. Reasonable-cause relief is possible and is decided by the IRS.
Who has to file Form 5472
Two groups. First, US corporations that are 25% or more foreign-owned and have transactions with a related foreign party. Second, since 2017, foreign-owned single-member LLCs, which the IRS treats as if they were corporations for this one purpose. That second group is where most penalties come from: a founder in India, the UAE or the UK forms a Wyoming or Delaware LLC, sends it some money to get started, and has just created a reportable transaction. Capital contributions, loans, and payments to or from the owner all count.
The form is attached to a pro forma Form 1120, a corporate return with only the identifying information filled in. It cannot be e-filed. It goes by fax or mail to a specific IRS address, and the transmission report is the only proof it was sent.
How the $25,000 becomes more than $25,000
The initial penalty is $25,000 per form, per year. If the LLC has two related parties, say the owner and the owner's other company, that is two forms and $50,000 per year. Once the IRS issues a notice and 90 days pass without the forms being filed, a further $25,000 applies for every 30-day period the failure continues. That is the continuation penalty, and it is why a notice cannot sit in a drawer while someone decides what to do.
The IRS has been assessing these penalties automatically since about 2020. The assessment arrives as a CP215 notice with a balance and a payment deadline, before anyone has looked at the facts.
What actually happens after a missed year
- Before any notice: file the missing years now, each with Form 5472, the pro forma 1120 and a reasonable-cause statement attached. Late filings made voluntarily are the strongest position for relief.
- After a CP215 notice: respond in writing within the window on the notice, file the forms, and request abatement citing reasonable cause. The continuation clock stops when the forms are filed.
- If abatement is refused: an appeal is possible, and the penalty can be paid and a refund claimed while the appeal runs. Interest accrues meanwhile.
Reasonable cause for this form is usually some version of: the owner is a first-time US filer, lives abroad, had no US income, relied on a formation service or preparer who never mentioned the form, and filed as soon as the requirement was discovered. Written specifically, with dates, it succeeds often enough to be worth doing every time.
Staying clear of it
- Put April 15 on the calendar for every year the LLC exists, including the year it was formed and the year it is dissolved.
- Keep a simple ledger of every transfer between the owner and the LLC. That ledger is the form.
- Obtain an EIN for the LLC; the form cannot be filed without one.
- File an extension (Form 7004) by April 15 if the books are not ready; the extended date is October 15.
- Keep the fax confirmation. Without it, a lost form is a $25,000 argument.
Questions people ask
My LLC made no money. Do I still file Form 5472?
Yes, if it had any transaction with the foreign owner: money in, money out, a loan, a contribution, even paying the formation fee from the owner's card. Most new LLCs have at least one.
Can Form 5472 be e-filed?
No. For a foreign-owned disregarded LLC the pro forma 1120 with Form 5472 attached is filed by fax or mail only. We fax-file and keep the transmission report.
I formed the LLC through a formation service. Are they responsible?
Not to the IRS. The filing obligation is the LLC's. Reliance on a service that never mentioned the form is, however, part of a reasonable-cause argument.
How far back does this go?
To 2017 for single-member LLCs. Each unfiled year is a separate penalty, so a 2020 LLC that never filed has up to five years of exposure.
Is the penalty ever actually collected?
Yes. It is assessed automatically, becomes a balance on the LLC's account, and the IRS pursues it like any other tax debt. Abatement is common when requested properly; ignoring it is not an option.
What does it cost to catch up?
From $99 per year for the 5472 and pro forma 1120, plus a reasonable-cause statement prepared with each year. We quote all open years together in writing.
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