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

Washington, D.C. (February 15, 2024) The American Institute of CPAs (AICPA) submitted a letter to the U.S. Department of the Treasury and Internal Revenue Service (IRS) requesting the IRS allow foreign-owned U.S. disregarded entities (DREs) to electronically file their Form 5472 with their U.S. federal income tax return through the IRS Modernized e-File system (MeF).

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."

About the American Institute of CPAs

The American Institute of CPAs® (AICPA®) is the world's largest member association representing the CPA profession, with more than 415,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. AICPA sets ethical standards for its members and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives continuing education to advance the vitality, relevance and quality of the profession.