Final Regs Drop Timely Form 5472 Even Though Untimely Return Rule

Final regs drop "timely Form 5472 even though untimely return" rule

T.D. 9707, 12/23/2014 ; Reg. § 1.6038A-1 , Reg. § 1.6038A-2 , Reg. § 1.6038A-4

IRS has issued final regs that drop the requirement that Form 5472, "Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business," be timely filed even when the corresponding income tax return is untimely filed. The final regs contain no substantive changes to proposed regs that were issued this past June.

Background. Form 5472 is filed by a "reporting corporation" with respect to certain related-party transactions. A reporting corporation is:

. . . a 25% foreign-owned domestic corporation; or

. . . a foreign corporation engaged in a "trade or business" within the U.S. at any time during the tax year. ( Code Sec. 6038A , Code Sec. 6038C )

Reg. § 1.6038A-2(a)(1) generally requires a reporting corporation to file a separate annual information return on Form 5472 with respect to each related party with which the reporting corporation has had any reportable transaction during the tax year.

Regs provide that: a) Form 5472 must be filed with the reporting corporation's income tax return for the tax year by the due date (including extensions) of that return ( Reg. § 1.6038A-2(d) ); b) if the reporting corporation's income tax return is untimely filed, (i) Form 5472 nonetheless must be timely filed, and, (ii) when the reporting corporation's income tax return is ultimately filed, a copy of Form 5472 must be attached. ( Reg. § 1.6038A-2(e) ) These regs were finalized in June, 2014 (see Weekly Alert ¶ 31 06/12/2014 ) and are effective for tax years ending on or after June 10, 2011. ( Reg. § 1.6038A-1(n)(2) )

At the same time that these regs were finalized, IRS also issued proposed regs that would drop the "timely Form 5472 even though untimely return" rule of Reg. § 1.6038A-2(e) . See Weekly Alert ¶ 31 06/12/2014 .

Final regs drop the "timely Form 5472 even though untimely return" rule. IRS has now adopted as final regs, without substantive change, the earlier proposed regs that drop the "timely Form 5472 even though untimely return" rule of Reg. § 1.6038A-2(e) . As a result, Form 5472 must be filed in all cases only with the filer's income tax return for the tax year, by the due date (including extensions) of that return.

Effective date. As a result of the change made by the new regs, Reg. § 1.6038A-2(e) applies only to tax years ending on or after June 11, 2011 and before Dec. 23, 2014. ( Reg. § 1.6038A-1(n)(2) )

References: For Form 5472 filing requirements, see FTC 2d/FIN ¶ S-5148 ; United States Tax Reporter ¶ 60,414.001 ; TaxDesk ¶ 815,504 ; TG ¶ 60,606 .