Form 5472 (US Corp with Foreign Owner) COVID Penalty Refund

Form 5472 reports related-party transactions of U.S. corporations and U.S. disregarded entities with foreign owners. The §6038A penalty starts at $25,000 per missed filing as of 2018. Penalties assessed during Jan 20, 2020 – July 10, 2023 may be eligible for refunds under Kwong. File Form 843 by July 10, 2026. Refund eligibility is not guaranteed; Kwong is being appealed.

Who qualifies

Form 5472 must be filed by U.S. corporations with 25%+ foreign ownership and by U.S. disregarded entities with foreign owners (since 2017 regs). The §6038A(d) penalty starts at $25,000 per failure to file, with continuation penalties of $25,000 per 30-day period after IRS notification. Penalties assessed during the disaster window may be eligible under the Kwong reasoning.

  • Account transcript shows a §6038A penalty assessment tied to a missing or late Form 5472, dated between Jan 20, 2020 and July 10, 2023.
  • Form 5472 was due with the parent Form 1120 (or equivalent for disregarded entities) within the disaster window.
  • Continuation penalties accruing during the disaster window may also be eligible.

How much could I get back?

Form 5472's $25,000-per-failure floor (with $25,000 per 30-day continuation increments) makes this one of the highest-dollar information-return penalties. A corporation with continuation penalties extending across multiple disaster-window months could face $100,000+ in cumulative §6038A exposure. Refund eligibility and amounts cannot be guaranteed.

Why this specifically

The 2017 regulations brought all U.S. disregarded entities with foreign owners (single-member LLCs, in particular) into the Form 5472 net — and many didn't realize it until they got assessed. Pandemic-era enforcement was significant. Kwong creates a procedural basis to challenge those assessments.

FAQ

Does this apply to single-member LLCs with non-U.S. owners?

Yes — the 2017 regulations require single-member LLCs treated as disregarded entities, with non-U.S. owners, to file Form 5472. Penalty assessments on those filings during the disaster window may qualify.

What if we got a $25,000 penalty but later it was reduced via reasonable-cause?

Only the remaining unabated portion is potentially eligible under Kwong. Pull the transcript to confirm the current balance.

Does the continuation-penalty structure change the Kwong analysis?

Continuation penalties accrue based on time elapsed after IRS notification. Any portion of the continuation that accrued during the suspended-deadline window may be challenged on the same Kwong reasoning.