The Form 5472 Continuing-Penalty Clock Starts With Specific Notice Conditions

The practical answer

A continuing-penalty review needs the actual notice and failure history, not just the original return due date. Keep the relevant notice, mailing information, response records, and unresolved obligations together before attempting to understand which clock the applicable rule describes. Three details shape the review: Which failure notice and mailing date are relevant? What continued after the notice? Are reasonable-cause timing conditions separately reviewed? Keep each answer tied to the document or confirmed fact that supports it.^{[1, p.3] [2]}

Scope and the records behind the answer

The discussion follows the entity, form and transaction conditions identified below. The same label on a different form can have a different purpose. Keep the relevant entity and reporting period visible while you compare the requirements, and treat each stated exception as part of the rule rather than an optional footnote.

Official sources checked: 2026-11-09. Annual tax-year forms and continuously revised forms are identified separately in the references.

A side-by-side preparation table

Work through the official requirements

Failure penalty

Failure to file Form 5472 at the prescribed time and in the prescribed manner, or to maintain required records, can result in a $25,000 penalty. A substantially incomplete form is treated as a failure to file.^{[1, p.3]}

Continuing failure penalty

If failure continues more than 90 days after IRS notification, the instructions provide an additional $25,000 for each related party affected, for each subsequent 30-day period or fraction of a period during which failure continues.^{[1, p.3] [2]}

This applies when: The failure continues more than 90 days after IRS notification.

Keep this limit in view: Under Regulations section 1.6038A-4(b)(1), the 90-day period cannot begin earlier than the last day on which the IRS determines that reasonable cause existed. The IRS determines reasonable cause and its duration; making a request does not automatically stop the clock.

Continuation penalty notice clock

If the relevant failure continues more than 90 days after the IRS mails a failure notice, an additional $25,000 may apply for each affected related party for each 30-day period. A fraction of 30 days counts as a full period.^[2]

This applies when: The relevant failure continues more than 90 days after the IRS mails its notice. The amount here applies to tax years beginning on or after January 1, 2018.

Keep this limit in view: The relevant clock starts with the IRS mailing the failure notice; do not accrue this additional penalty directly from the original filing due date. Determine the reasonable-cause period and treatment of a second failure under Regulations section 1.6038A-4(b) and (d), respectively. Under Regulations section 1.6038A-4(b)(1), the 90-day period cannot begin earlier than the last day on which the IRS determines that reasonable cause existed. The IRS determines reasonable cause and its duration; making a request does not automatically stop the clock.

Field/section Top annotation: Foreign-owned U.S. DE

Write "Foreign-owned U.S. DE" across the top of the pro forma Form 1120 to identify this special filing.^{[1, p.2]}

Field/section Name: Name

Enter the foreign-owned U.S. DE's name.^{[3, p.1] [1, p.2]}

Field/section Address: Number and street. If a P.O. box, see instructions.

Enter the DE's complete address, including the applicable room or suite, city, state or province, country and postal-code fields shown on the form.^{[3, p.1] [1, p.2]}

Field/section B: Employer identification number

Enter the DE's EIN.^{[3, p.1] [1, p.2]}

Field/section E(1): Initial return

Check the applicable item E box to identify an initial return when that describes the filing package.^{[3, p.1] [1, p.2]}

Field/section E(2): Final return

Identify a final return using the applicable item E box. Dissolution does not by itself establish that all federal tax matters are complete.^{[3, p.1] [1, p.2]}

An illustrative preparation scenario

In this hypothetical preparation example, a business owner calculates an assumed penalty from the return's original due date but has not reviewed the IRS notice. The preparation file is reorganized around the relevant notice and documented events, with reasonable-cause questions kept separate from any unsupported assumption that the clock has stopped. The preparer checks three points: Which failure notice and mailing date are relevant? What continued after the notice? Are reasonable-cause timing conditions separately reviewed? The file remains a working comparison until the relevant facts and applicable instructions have been checked together. No agency outcome is assumed.^{[1, p.3] [2]}

This is a planning illustration, not a statement that a particular filing has been accepted or that an entity qualifies for a tax result. Use the source-backed distinctions above to decide what information still needs to be established before a form is completed.

A review sequence you can actually use

1. Which failure notice and mailing date are relevant?
2. What continued after the notice?
3. Are reasonable-cause timing conditions separately reviewed?

Write down the answer and the record that supports it, rather than marking a question complete because a field contains text. When two records disagree, identify whether the difference concerns the entity, an individual, the reporting period or the type of change. That makes the remaining question specific enough to resolve against the relevant instruction.

Keep the scope of a preparation service separate from the government requirement. A service intake question may gather information for a workflow; it does not create an exception, extend a deadline or determine whether a transaction is reportable. The cited government material remains the basis for those conclusions.

Questions to settle before moving forward

How should I check continuation penalty notice clock?

If the relevant failure continues more than 90 days after the IRS mails a failure notice, an additional $25,000 may apply for each affected related party for each 30-day period. A fraction of 30 days counts as a full period. The relevant failure continues more than 90 days after the IRS mails its notice. The amount here applies to tax years beginning on or after January 1, 2018. The relevant clock starts with the IRS mailing the failure notice; do not accrue this additional penalty directly from the original filing due date. Determine the reasonable-cause period and treatment of a second failure under Regulations section 1.6038A-4(b) and (d), respectively. Under Regulations section 1.6038A-4(b)(1), the 90-day period cannot begin earlier than the last day on which the IRS determines that reasonable cause existed. The IRS determines reasonable cause and its duration; making a request does not automatically stop the clock.^[2]

How should I check field/section top annotation: foreign-owned u.s. de?

Write "Foreign-owned U.S. DE" across the top of the pro forma Form 1120 to identify this special filing. ^{[1, p.2]}

How should I check field/section name: name?

Enter the foreign-owned U.S. DE's name. ^{[3, p.1] [1, p.2]}

How should I check field/section address: number and street. if a p.o. box, see instructions.?

Enter the DE's complete address, including the applicable room or suite, city, state or province, country and postal-code fields shown on the form. ^{[3, p.1] [1, p.2]}

Official sources and versions

1. Instructions for Form 5472 (Rev. December 2024) — Rev. December 2024
2. 26 CFR 1.6038A-4 Monetary penalty for failure to furnish information or maintain records — 2026-11-05
3. 2025 Form 1120

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