What is First-Time Abatement? Does it apply to Form 5472?
First-Time Abatement explained: which penalties it covers, and the specific case where the IRS manual allows it for a Form 5472 penalty.
First-Time Abatement (FTA) is an administrative waiver: the IRS removes certain penalties for a taxpayer with a clean compliance history, without asking why the failure happened.
The general rule
The IRS page on penalty relief lists failure-to-file, failure-to-pay and failure-to-deposit penalties. The Form 5472 penalty is not among them.
The Form 5472 exception
The IRS manual (IRM 20.1.9.5.5) describes one case. When the $25,000 penalty was assessed automatically because Form 5472 was attached to a late Form 1120, it "may be abated" under FTA if the related Form 1120 failure-to-file penalty was abated under FTA, or "would have been eligible for FTA abatement but a failure to file penalty wasn't assessed because there was $0 tax due". The taxpayer must also have had no similar Form 5472 penalties, and no late Form 1120, in the three prior periods.
A pro forma Form 1120 shows $0 tax, so a first-time late filer may fit. Ask for it alongside reasonable cause, not instead of it.
Go further
Missed Form 5472 for Past Years? Step-by-Step Catch-Up Guide
Missed Form 5472 filings? Discover how to catch up on late Form 5472 filing, prepare pro forma Form 1120, submit reasonable cause, and handle IRS penalties.
Read the guide1040-NR Foreign LLC Owner: Do You Need to File?
Wondering if you must file Form 1040-NR as a foreign LLC owner? Learn how ECI, US trade or business status, and tax treaties affect your return.
Read the guideThis article is general information about US tax rules for foreign-owned LLCs, not advice for your specific situation. Rules change; check the date above and ask before you file.