5472 Penalty Reasonable Cause Excuse
Tax News You Can Use
Have you received a $25,000 penalty for not filing a Form 5472 or filing it incorrectly? Maybe we can help.
If a corporation fails to file Form 5472 or does not properly report its transactions with related parties, it may be subject to penalties. However, the IRS may waive these penalties if the corporation can show that it had a reasonable cause for not filing the form or not properly reporting its transactions.
To establish reasonable cause, the reporting entity must show that it exercised ordinary business care and prudence in attempting to comply with the tax law, but was unable to do so due to circumstances beyond its control. Examples of circumstances that may qualify as reasonable cause include natural disasters, serious illness or injury, and other unexpected events that prevented the corporation from filing the form on time or from properly reporting its transactions. Erroneous advice and other such claims may also help.
If a corporation is unable to file Form 5472 or properly report its transactions due to reasonable cause, it should contact the IRS as soon as possible to request a waiver of the penalties. In order to request a waiver, the corporation may need to provide documentation to support its claim of reasonable cause, such as medical records or proof of a natural disaster. The IRS will review the corporation's request and determine whether to waive the penalties based on the specific circumstances of the case.
Let us help you draft the proper response to the penalty.
Written by John M Matras CPA MBA Copyright 2022. Tax news you can use is a feature to the subscribers of the mytax.today app and JM Matras CPA Incorporated. All rights reserved.