IRS Eliminates Form 5472 Duplicate Filing Requirement

On June 9, the IRS issued temporary and proposed regulations to remove the duplicate filing requirement for Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business (T.D. 9529 and REG-101352-11).

Under the current final regulations, corporations that are required to file Form 5472 must file with their annual tax return a separate Form 5472 for each related party with which the reporting corporation had any reportable transaction during the tax year (Regs. Sec. 1.6038A-2(a)(1)). The final regulations also require such corporations to file a duplicate Form 5472 with the IRS Service Center in Philadelphia (Regs. Sec. 1.6038A-2(d)).

The IRS has determined that advances in electronic processing and data collection have made the duplicate filing requirement unnecessary. Therefore, the temporary and proposed regulations eliminate the duplicate filing requirement (regardless of whether the corporation files a paper or electronic return).

The IRS cautions that a reporting corporation that does not file its income tax return on time is still required to timely file Form 5472. Because there are currently no procedures for electronically filing Form 5472 independent of an electronically filed income tax return, a reporting corporation that does not timely file an income tax return must still timely file a paper Form 5472.

Reporting corporations that fail to file Form 5472 by the prescribed deadline may be assessed a penalty of $10,000 for each tax year for which such failure occurs. After 90 days, the IRS can impose an additional $10,000 penalty for each 30-day period (or part of a 30-day period) in which the company fails to provide the information (Sec. 6038A(d)).

The elimination of the duplicate filing requirement is effective for tax years ending on or after the publication of the temporary regulations in the Federal Register.