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Penalties for failure to file Form 5472 is a penalty of $10,000 will be assessed on any reporting corporation that fails to file Form 5472 when due and in the manner prescribed. The penalty also applies for failure to maintain records as required by Regulations section 1.6038A-3.
If the failure continues for more than 90 days after notification by the IRS, an additional penalty of $10,000 will apply. This penalty applies with respect to each related party for which a failure occurs for each 30-day period (or part of a 30-day period) during which the failure continues after the 90-day period ends.Criminal penalties under sections 7203, 7206, and 7207 may also apply for failure to submit information or for filing false or fraudulent information.
The penalty may be abated after the IRS assessed penalties, the taxpayer may ask to abate under two possible reasons:
- First-time abatement (FTA) - if the taxpayer has not previously been required to file a return or has no prior penalties for the last three years.
- Reasonable cause - if the IRS determines that the taxpayer exercised ordinary business care and prudence in determining its tax obligations but was nevertheless unable to timely file the return.
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