One of the most stressful discoveries a foreign founder can make is realizing they missed the IRS deadline for filing Form 5472. Many people form their Wyoming or Delaware LLC through a formation company, or set up a corporation to raise capital, only to find out months later that there was an annual IRS filing they didn’t know about. The natural question is: what happens now?
This article explains what missing the Form 5472 deadline means, what penalties apply, whether you can fix it, and how to avoid problems going forward. We’ll go in depth so you understand the rules and the practical steps available to you.
Why Form 5472 matters
Form 5472 is required for foreign-owned single-member LLCs and for corporations that are 25% or more foreign-owned. For single-member LLCs, it is filed alongside a pro forma Form 1120. For corporations, it is filed with the company’s regular Form 1120 corporate return. Even if the company had no revenue, the IRS expects the form every year.
The IRS uses this filing to track foreign ownership and money flows into and out of U.S. companies. Because it’s an information return, missing it doesn’t just mean you owe more tax—it means you’ve failed to disclose information the IRS requires. That’s why the penalties are so steep.
The penalty for late or missing Form 5472
The standard penalty for failing to file Form 5472 on time is $25,000 per year, per form. If a corporation has multiple foreign owners, each required Form 5472 that is not filed can trigger a separate $25,000 penalty. For example, a corporation with two 50% foreign shareholders that fails to file both forms could face $50,000 in penalties.
If the IRS notifies you of the failure and you continue not to file, additional penalties of $25,000 can be added for each 30-day period of continued noncompliance.
These penalties apply even if your entity had no revenue, no clients, and no income. The penalty is for not disclosing the information, not for underpaying tax. This often surprises founders, who assume that “no activity” means “no filing.”
Can penalties be removed?
In rare cases, the IRS may waive or reduce penalties if you can show “reasonable cause.” Reasonable cause means you had circumstances outside your control that made compliance impossible, such as serious illness, natural disasters, or misinformation directly from the IRS.
Simply not knowing about the requirement may not be accepted as reasonable cause, although in some cases—especially for first-time offenders—the IRS has granted relief under what is called a “first-time abatement.”
If you try to request penalty relief, you’ll need to file the missing Form 5472 along with a written statement explaining why you missed the deadline. The IRS will review your request, but most relief requests are denied unless there are very strong facts. This makes prevention far more effective than trying to argue for relief after the fact. Once penalties are assessed, they are very difficult to reverse.
What to do if you missed the deadline
If you’ve missed the deadline, the best step is to file as soon as possible. Late is better than never. The IRS may assess a penalty, but showing you acted quickly once you realized the mistake can help your case if you need to request relief. Filing demonstrates good faith, which is important in dealing with the IRS.
The filing process involves:
- Making sure your entity has an EIN (Employer Identification Number). Without an EIN, you can’t submit Form 5472 or the required 1120.
- For single-member LLCs, preparing a pro forma Form 1120 with Form 5472 attached.
- For corporations, preparing and filing Form 1120 with each required Form 5472 attached for every reportable foreign owner.
- Submitting the return to the IRS by mail or fax, since e-filing is not available for pro forma 1120s.
At Bookmate, we help clients prepare these filings and explain exactly what to expect. While we don’t file past years ourselves, we guide you on the best way to address back years if you’ve missed multiple deadlines.
Example: A missed deadline in practice
A founder in Germany forms a Wyoming LLC in March 2023 but doesn’t realize Form 5472 was due in April 2024. By July, she learns about the requirement. At that point, the form is already late. If she files in July, the IRS may still issue the $25,000 penalty. However, filing quickly shows she is making an effort to comply. If she had waited another year, penalties would accumulate, and her situation would be much worse.
Now consider a corporation with two 50% foreign owners. If it fails to file Form 1120 with the two required Forms 5472, the IRS could assess $25,000 for each missed form, for a total of $50,000 in penalties. This shows how quickly the costs can add up if corporations overlook the requirement.
Other consequences of missing the deadline
The financial penalty is the most obvious consequence, but there are others. Falling out of compliance with IRS requirements can make it harder to open or maintain a U.S. bank account, since banks often require proof of good standing. It can also cause problems if you apply for certain visas or immigration benefits, as U.S. authorities may review your company’s tax compliance.
In some cases, repeated noncompliance can even lead the IRS to audit your company.
How to avoid this in the future
The best way to avoid penalties is to know your obligations early. Every foreign-owned single-member LLC must file Form 5472 with a pro forma 1120, every year, even if there was no activity. Corporations that are at least 25% foreign-owned must file Form 1120 with the required Form(s) 5472 attached. The due date is the same as the corporate tax return: generally April 15, or October 15 with an extension.
Setting up bookkeeping from the start also makes this much easier. Even if your company only has a few transactions, keeping clear records ensures you know what to report. At Bookmate, we work with clients to keep their records in order so filings are simple when tax season arrives.
We also provide reminders and deadline tracking, so you don’t have to remember dates on your own. Having a system in place prevents the stressful situation of discovering you missed the deadline months later.
You can book a consultation here if you think you’ve missed a deadline or want to make sure you’re on track for the current year.
Final thoughts
Missing the Form 5472 deadline is serious. The IRS penalty is $25,000 per form, and penalties can stack if you remain noncompliant. Corporations with multiple foreign owners are especially at risk, since each missing Form 5472 can create its own penalty. While there is a small chance of relief under reasonable cause or first-time abatement, the best approach is to file immediately once you realize the mistake and to prevent it from happening again in the future.
Bookmate works with foreign founders to ensure these filings are never overlooked. Whether you’re catching up or planning ahead, we can help you avoid costly penalties and keep your U.S. business in good standing. We make sure you understand exactly what needs to be filed, when, and how to stay compliant year after year.
Learn more at trybookmate.co or book a consultation today.
