Regulations Tightening Form 5472 Filing Requirements Are Finalized

Final regulations issued by the IRS on Wednesday (T.D. 9707) remove the provision allowing Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, to be timely filed separately from the corporation’s tax return if that return is filed late. The regulations finalize proposed rules issued in June (REG-114942-14) without substantive change.

Under the final regulations, Form 5472 is now required to be filed in all cases only with the filer’s income tax return by the due date (including extensions) of that return. This brings the Form 5472 filing requirements into line with those for Forms 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, and 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, for which there is no provision for timely filing of the form separate from the taxpayer’s tax return.

A corporation that fails to file Form 5472 by the due date may be assessed a penalty of $10,000 for each tax year for which a failure occurs. If the failure to file the form continues for more than 90 days after the IRS mails the corporation a notice of its failure to file, 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)(2)).