AICPA Recommends Foreign-Owned U.S. Disregarded Entities be Allowed to E-File Form 5472

The American Institute of CPAs has submitted a letter to the U.S. Department of the Treasury and Internal Revenue Service requesting the IRS allow foreign-owned U.S. disregarded entities to electronically file their Form 5472 with their U.S. federal income tax return through the IRS Modernized e-File system.

The U.S. DREs who are required to file Form 5472 are foreign owned. In general, most foreign-owned U.S. DREs do not have employees in the U.S. Accordingly, most Forms 5472 filed by foreign-owned U.S. DREs are from outside of the U.S. Sending U.S. tax filings via the mail from overseas to the IRS can be a complex procedure, particularly if the sender wishes to get a proof of mailing. Many such proof of mailing documents are not even written in English. In addition, fax machines are rarely used by businesses in the twenty-first century.

“Form 5472 instructions only allow for it to be filed by foreign-owned U.S. DREs via fax or mail, with no provision for electronic filing,” says Reema Patel, Senior Manager for Tax Policy & Advocacy with the Association. “AICPA believes that the Form 5472 filings should be able to be e-filed since most Form 5472 filings by foreign-owned U.S. DREs are made from outside of the U.S. and the penalty is $25,000 for a late filing.”