Regs. Tighten Form 5472 Filing Requirements

The IRS issued final (T.D. 9667) and proposed (REG-114942-14) regulations amending the rules for filing Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business. The final regulations adopt without change temporary and proposed regulations issued in 2011 eliminating the requirement to file a duplicate Form 5472 with the IRS service center in Philadelphia, as well as with the income tax return. (For prior coverage, see here.)

The proposed regulations would remove the provision allowing Form 5472 to be timely filed separately from the taxpayer’s income tax return if that return is filed late. After the rules are adopted, Form 5472 would be 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 will bring the filing requirements for Form 5472 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)).

The final regulations, which remove the temporary regulations issued in 2011, are effective June 6, 2014, the date they will be published in the Federal Register. The proposed regulations will be effective when they are published as final in the Federal Register.