Form 5472 penalty relief checker

Most penalty relief does not cover Form 5472. The IRS manual describes two routes: a narrow First Time Abate exception, and reasonable cause. Answer the three questions above to see which one the manual points to for your penalty.

How the checker decides

It asks three things, each taken from the IRS rules quoted below:

1. How the form reached the IRS. Did you file Form 5472 late, attached to your pro forma Form 1120, before the IRS contacted you?
2. The three years before. Was a Form 1120 of the LLC filed late, or a Form 5472 penalty charged, in the three prior tax years?
3. The tax year. Is the penalty for 2024 or earlier, or for 2025 or later?

A fourth box covers the penalty that keeps growing after an IRS notice.

Route 1: First Time Abate, only in one case

The IRS manual is clear on the general rule. IRM 20.1.9.5.5(3) says: "The first time abatement (FTA) penalty relief provisions do not apply to event-based filing requirements such as with Form 5472". The general FTA section, IRM 20.1.1.3.3.2.1, also excludes "information reporting that is dependent on another filing, such as various forms that are attached", lists Form 5472, and adds "(See IRM 20.1.9 for exception.)". FTA covers a single tax period.

The exception: when the $25,000 penalty is "systemically asserted because Form 5472 is attached to a late filed Form 1120", it "may be abated" under FTA if the late-filing penalty on that Form 1120 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". A pro forma Form 1120 shows $0 tax. Two more conditions apply:

• "The taxpayer had no similar penalties (PRNs 625 or 711) in the three prior periods";
• "The related Form 1120 return was not filed late in the three prior periods".

In practice, this can only help for the earliest missing year: each later year fails the second test, because the Form 1120 of the year before was late too. If FTA does not apply, the manual adds that "penalty relief is still available when reasonable cause can be demonstrated".

Route 2: reasonable cause

Reasonable cause is open in every case. The regulation, 26 CFR 1.6038A-4(b), asks for "an affirmative showing of all the facts alleged as reasonable cause for the failure in a written statement containing a declaration that it is made under penalties of perjury".

It also says the IRS applies it "liberally in the case of a small corporation that had no knowledge of the requirements imposed by section 6038A; has limited presence in and contact with the United States; and promptly and fully complies with all requests ... to file Form 5472, and to furnish books, records, or other materials". A small corporation is one with gross receipts of $20,000,000 or less for the year.

The manual (IRM 20.1.9.5.5(1)) recommends that reasonable cause not be considered until all late returns are filed. Our penalty abatement letter guide has a fill-in template for the statement.

2025 and later: the new automatic relief (AEP)

On July 8, 2026, the IRS announced that an "Automatic Exemption from Penalty" (AEP) replaces First Time Abate (IR-2026-83). It starts in summer 2026 with 2025 tax year returns, and fully replaces FTA for returns originally due on or after January 1, 2027. During the transition, "Taxpayers who believe they qualify may contact the IRS to request First Time Abate". The release adds that information returns and returns filed only for specific events "generally are not eligible".

The IRS administrative relief page lists the forms AEP covers: 1040, 1065, 1120, 940, 941, 943, 944, 945 and CT-1. Form 5472 is not one of them, and the page excludes "Information reporting dependent on another filing". To ask for FTA, the same page says to call the number on your notice, or send a written statement or Form 843.

The IRS has not published how the Form 5472 exception in the manual works with AEP. That part of the manual has not been revised since January 29, 2021. For a 2025 or later penalty, ask for First Time Abate and reasonable cause together.

The penalty that no relief covers

If Form 5472 is still not filed more than 90 days after the IRS mails its notice, 26 CFR 1.6038A-4(d)(1) adds $25,000 per related party for each 30-day period, and "Any uncompleted fraction of a 30-day period shall count as a 30-day period". It stops when the form is filed.

The manual (IRM 20.1.9.5.5(2)) explains that reasonable cause can exist, at the latest, until 90 days after the notice: "As such, there is no reasonable cause exception for this penalty". If you received a notice, file the missing form first.

What this checker does not do

It sorts the routes the IRS manual describes, from your answers. It does not see your IRS account, and the IRS decides every request. It is general information, not legal or tax advice. Melya prepares the late filings and the reasonable cause statement for your signature; Melya does not represent clients before the IRS.

Frequently asked questions

Can I ask for First Time Abate by phone?

The IRS administrative relief page says you can call the number on your notice, or send a written statement or Form 843. Reasonable cause is different: the regulation requires a written statement signed under penalties of perjury.

My pro forma Form 1120 showed $0 tax. Does the exception apply?

It can. The manual allows FTA when the Form 1120 "would have been eligible for FTA abatement but a failure to file penalty wasn't assessed because there was $0 tax due". The penalty must also have been charged automatically with the late Form 1120, and the three prior tax years must have no late Form 1120 and no similar penalty.

Should I file the late Form 5472 before asking for relief?

The manual recommends that reasonable cause not be considered until all late returns are filed. After an IRS notice, filing is also what stops the $25,000 per 30-day continuation penalty.

Does First Time Abate cover several missing years?

No. FTA covers a single tax period, and only the earliest missing year can meet the three-year conditions. The other years rely on reasonable cause.