Form 5472 Has No E-File Option and Big Penalties
Small business owners, particularly those with LLCs taxed as S-corps and foreign ownership, are struggling with complex and outdated tax filing requirements. The lack of e-filing options for critical forms like 5472, combined with potential for significant penalties, creates a stressful and costly burden.
SOURCES (60)
“Not an accountant, but I run business ops for an accounting firm in Puerto Rico, so I see this comparison a lot from that side of things. Delaware and Wyoming get recommended nonstop because you don't actually have to be there... just a registered agent…”
“Your husband is likely a "1099" worker. He should set aside 30% for taxes. He should also file taxes quarterly as a self employed worker. The "partner" is likely violating many local labor laws; if he is treated like an employee full time (not on a per project basis), then he deserves healthcare, ssi, etc, which varies from state to state. It is likely crocked employment, but filing it as income is the "right" thing to do.”
“Your husband is likely a "1099" worker. He should set aside 30% for taxes. He should also file taxes quarterly as a self employed worker. The "partner" is likely violating many local labor laws; if he is treated like an employee full time (not on a per project basis), then he deserves healthcare, ssi, etc, which varies from state to state. It is likely crocked employment, but filing it as income is the "right" thing to do.”
“By "random people" do you mean their contracted clients? Not that it's relevant. If you claim the income on your personal 1040 on schedule C, the IRS will expect to match that income to your SSN, not to an EIN that isn't on any income filings.”
“I use ein for these. Reason: if you elect a corp, you don’t need to correct the 1099 for matching down the road.”
“For a one member LLC that’s not a S-Corp, the W9 instructions specifically say to use your SSN. Lots of people ignore this though.”
“God damn lol. You’re getting some shitty replies bro. They aren’t wrong but not polite. Depends on where you’re at. California makes it very hard for a well run and above board tax service provider to rip you off. But I don’t know outside of California. Even in California I wouldn’t expect an easy win on getting back all your money. A lot of tax companies are like this though. “I’ll do an investigation and inspection of your situation for $750” and then after they do that it leads to more fees b”
“I'm about to set up a US LLC as a non-US resident, and I'm planning to do everything myself. (i have no prior experience) I know I could just pay one of those companies to handle it, and it would probably save me some time. But I actually want to go through the whole process myself because I want to understand how everything works. I'm building something for the long run, and I'd rather learn it now than rely on someone else every time. I've heard it's not actually that d”
“You will have to file a resident state tax return in California and a non-resident state tax return in New Jersey. File the Schedule S "Other State Tax Credit" with your California tax return. https://www.ftb.ca.gov/file/personal/credits/other-state-tax-credit.html https://www.ftb.ca.gov/forms/2025/2025-540-s-instructions.html#C.-California-Residents”
“I don't know if it applies to you, but when my company was based in IL, and I was in Texas, I had to sign a document every year saying I wouldn't work in IL more than 30 days (I think it's 30) without notifying the company. My understanding is because after 30 days I could be subject to IL taxes. FWIW my tax non-attorneygpt wants to add: The rule (effective for tax years ending on or after Dec. 31, 2020): Illinois requires employers to withhold IL income tax from a nonresident employ”
“The OBBBA deductions are all "below the line" and do not reduce AGI - they are taken on Form 1040, line 13b. California uses federal AGI (Form 1040, line 11b and Form 540, line 13) as a basis, so no conformance adjustment for overtime is necessary. In fact, if California did conform to any special below-the-line deduction on your federal return, you would need a conformance subtraction to apply it.”
“My former employer withheld my California state taxes but I don't think they paid them to the state. I got a letter from the Franchise Tax Board saying there's a discrepancy with my CA withholding, and the amount is the same as the CA tax on my W-2. The company was newly started, and my W-2 doesn't even have the California state ID number (Box 15 is blank), which is why I think they never reported and remitted it. I've emailed and messaged my former employer multiple times, but t”
“just an update when i called irs they told as of now there are no notices with regards to my EIN”
“just an update when i called irs they told as of now there are no notices with regards to my EIN”
“i am considering using it, but their fax confirmation doesn't say anything.did you get fax confirmation with all these details: Does the confirmation include the fax transmission date and time? Is there a fax transmission ID or confirmation number? Does it include the IRS fax number, number of pages transmitted, and delivery status? Do you receive a copy of the submitted filing package along with the fax confirmation for records?”
“I have a UK limited company, but because my turnover is very low, I’m not VAT registered and I don’t have a VAT number. When setting up a Meta Ads account, Meta asks for a VAT number. If I don’t provide one, they automatically add 20% VAT to my advertising costs. There used to be a few workarounds, but after Meta’s latest update, they no longer seem to work. Is there any legitimate way to avoid paying the extra 20% VAT to Meta without having a VAT number? submitted by /u/Horror_Citro”
“For anybody else thinking of using the answers here for their circumstances, you should be aware that this one involves a foreign national. If you are a U.S. resident and formed your corporation or LLC in your state or a different one, you may still have to file with the state even if no federal return is required. Many states have a minimum tax or fee due even in years with no activity.”
“Well, in this particular case, I don’t see any real downside to just letting the Wyoming LLC go dark and be administratively dissolved, given that it never had an EIN, bank account, assets, or operations and you don’t intend to use it. The only true “worst case” on the 5472 side would be the IRS later arguing that your personal payment to Firstbase was a reportable contribution and asserting the standard 5472 penalty for 2025, but that’s a very theoretical risk here and, in practice, something t”
“Thanks a lot for the quick and detailed replies — this is very helpful. One last thing: if I simply let the Wyoming LLC become administratively dissolved and do nothing else, do you see any realistic risk or downside in this specific situation? And regarding Form 5472, what would be the worst-case practical outcome if the IRS later took the opposite view and considered the Firstbase formation payment reportable?”
“I know this topic has been covered a bunch but wanted to see if anyone had any guidance on this particular situation. Have a client who started a Partnership but decided he wanted to switch to an S Corp. Of course I only hear about this in May so sending in a timely election is out of the question. What's the best way to send this in to make it effective for 2026? In the past, I've always faxed it in for current year elections but even with fax about 60% of the time nothing ever gets pro”
Get an IRS Online account and pull all wage and income transcripts
“B is correct. You have to file a tax return to show business expenses. Also, you have to file a tax return if you want to have a net operating loss (NOL) to carry forward to use against income in a future year. The question didn't drill deep enough but filing is especially important if the filer received any 1099 forms for revenues in the business. Also, if "Ryan" is eligible for any refundable tax credits he would have to file a return to claim them.”
“How are you all receiving and making payments for your business while in this EIN loop? Were you able to create a business bank account (if so, how?) or are you handling this via a personal account until this is resolved? I can't get a clear answer on this and I need to start work! At this point I can't even get my faxed forms to go through. Many thanks for any tips or info”
“Hello, My new client's business is essentially defunct with not much going on and he would like to shut it down. But when he sent in the paperwork to do that, the state came back with a notice indicating all these years that S corp gross receipts taxes had not been paid along with penalties and interest (all this incurred before I was ever involved), and the state won't shut down unless everything is paid (I would assume). The business has little activity and no assets. I have never done”
“I formed an LLC several years ago and have always been the only owner. Really? Not a partnership with two partners, one a CPA, and the other an EA? Your post and comment history seems to point to you having a partnership and knowing that you have a partnership. Your firm's website shows two partners... one a CPA.. and one an EA. Recently I found out that my EIN is apparently coded as a partnership How recently?”
“A single member LLC defaults to a sole proprietorship (Schedule C) and a multiple member LLC defaults to a partnership. The simplest way to resolve the problem with the IRS is to file a 1065 and mark it as both an initial return and as a final return. That will close it out in the IRS's records. Then, get a new EIN for your LLC and when you apply for the EIN, be sure and mark it as for a sole proprietorship. If you do not do that, then yes, you will get notices and penalties for not filing p”
“Has the business ever had activity? Have you ever received a notice from the IRS an alternate treatment to what you've been doing? If you've been reporting the business activity appropriately all these years, I would maintain records of the LLC's formation, and reporting from its inception to the present. This would show all income was reported and the 1065 designation was a clerical error because there were never and other members, you can't have a partnership with only one part”
“I'm hoping someone can point me in the right direction. I formed an LLC several years ago and have always been the only owner . I've never had a partner, never issued a K-1, and no one else has ever owned any part of the business. Recently I found out that my EIN is apparently coded as a partnership, so it looks like the IRS expects a Form 1065. I'm not sure if the EIN application was filled out incorrectly when the LLC was created. Has anyone dealt with this before? Do I need to fil”
“I'm hoping someone can point me in the right direction. I formed an LLC several years ago and have always been the only owner . I've never had a partner, never issued a K-1, and no one else has ever owned any part of the business. Recently I found out that my EIN is apparently coded as a partnership, so it looks like the IRS expects a Form 1065. I'm not sure if the EIN application was filled out incorrectly when the LLC was created. Has anyone dealt with this before? Do I need to fil”
“If I owe 400k+ per quarter of estimated taxes to the IRS to avoid underpayment penalty during 2027, what personal credit card can I get to pay that? I have a citi double cash 2% back that I already use for taxes but the limit is stuck at 50k, and I can only swipe it 4 times a quarter per IRS rules. So, 4 x 50k is only 200k and not enough next year. The processor fee is 1.75% and 1.85% currently so I need credit cards with more cashback than that to make it worth it. Does Amex charge cards give e”
“Is your question centered on how to comply with tax law in this situation, or are you asking if it's going to increase your risks of getting caught not complying with tax law.”
“My family is trying to structure a small house-flipping business in Illinois and I’m trying to understand what questions to ask a CPA/attorney before we set anything up. Basic situation: My dad has experience buying distressed properties, fixing them up, and reselling them. He would be the main operator doing/overseeing the rehab work, bids, contractors, property decisions, etc. His sons would mostly contribute capital and be passive investors. We may start with around $250k total family capital”
“If the company is cash basis for tax purposes, why are worrying about what happens on accrual based reports? Sales taxes should accrue in that liability account whenever an invoice is created because accrual based accounting would reflect the income & sales tax liability whether the income was received or not. Cash basis should reflect only the actual payments received. Leave the accrual reports alone and adjust the cash basis reports as needed.”
“Anyone know how to register for a myftb business account without having a prior tax return for the business? I'm genuinely confused as to how they expect anyone to make an account with a tax return requirement. As a brand new business, I clearly don't have a tax return. WTF? Also, its impossible to get a hold of anyone through the help line. Can't even get in line to be on hold. I submitted by /u/LawDeep4350 [link] [comments]”
“Got an email today: Suzy I sold some stock. Long term capital gains is around $197,000. What is my tax rate %. No salutation. No thank you. Not a request, just an order. Now I know what this client really wants to know is what are the tax ramifications of this LTCG and there's a number of things in play here. They will lose the $12K additional deduction, have an NIT, and so forth. If they had sent me a polite email I would have asked for clarification as to what they really wanted to know bu”
“Question for accountants/tax pros: what should a small S-corp client ask before hiring a CPA? I have a single-member LLC taxed as an S-corp, mostly ecommerce/Amazon sales, plus personal taxes. I also have some PA local tax/payroll cleanup issues from prior years. My current firm filed extensions but has been hard to get a response from, so I’m trying to be smarter if I interview other firms. What questions would help me tell the difference between someone who can actually handle this vs someone”
“Hi, Can somebody help me understand this better. I asked a seller what his net profit/SDE is and he said $145,000 in net income plus we paid ourselves $100,000 in dividends. Previous year we paid ourselves $200,000 Do you add back the 100,000 in dividends paid to $145,000 to get to SDE ? submitted by /u/Ok_Astronaut_536 [link] [comments]”
“Hi - my Canadian based company had sales in 2022 and 2023 to businesses and individuals in MO. The Dept of Revenue has requested we pay use tax or otherwise submit data showing why we should be exempt. When I look at it, I think our sales to the business should be exempt as they charged the tax upon reselling and filed a return - they have provided us with their tax ID. Our sales to individuals though - do I understand it correctly that we owe the 4.225%, plus penalties plus interest? The forms”
“Is there a reason why people are questioning their credentials? They both have up to date CPA licenses with their respective states. I was able to find it.”
“Background: Taxpayer came to me for TY2023. He had an LLC and said he was sole prop. I pressed on number of owners/partners/shareholders. He did not have the EIN letter but was adamant that there were no other owners. We file a Sch C and all is good. Same for TY2024. Sometime in late 2025 he says his banker needs a K-1. Suddenly he finds the CP575 indicating that it is a partnership. I let him know we have some corrections to do. I get the TY2025 info and prep the 1065. I ask for the partner inf”
“Probably nowhere near 6.3% for NJ. Edit: rearranged 2025 caveats, putting it all at the top... Using 2025 numbers, since I'm too lazy to go look for any 2026 changes for NJ: NJ starts with total income (your husband's $63k plus your profit from business). Then, after subtracting a $3500 exemption/deduction amount, marginal tax brackets are applied. Starting with your husband's $63k, you're in NJ's 2.45% bracket ($50k - $70k). Then it's 3.5% for $70k to $80k and 5.525% for”
“I have been having such an issue with Etsy verifying my taxpayer information due to my drivers license having a different name than my Social Security card. I recently changed my name to match on my Social Security card and drivers license, but Etsy is still giving me issues and their customer service is a nightmare. One second I will get an email saying that my info has been verified, and then the next second I get an email saying my account is frozen or suspended. I don't even actually kno”
“Has anyone dealt with this FTB nightmare? I’m hoping someone here has experienced something similar because we’re completely stuck. A California LLC elected S Corporation status, so now the same business has two different California Entity IDs—one for the LLC and one for the corporation. The annual $800 LLC tax was accidentally paid using the LLC Entity ID. However, the balance is showing as unpaid under the S Corporation Entity ID. We called the FTB and asked them to either transfer the payment”
“Not a community property state. Plan to file married filing separately. I don’t know what she’s filed. Getting information from her is incredibly difficult.”
“Two separate questions here: Do you need a separate business bank account? Yes, 100%. Do you need an LLC to get one? No. You can open a business checking account as a sole prop. If you want clients paying a business name instead of your personal name, you might need a DBA filing depending on your state, but that's like $20-50. Not the same as forming an LLC. Reasons to open it now: tax prep is way easier when all business income/expenses are in one place instead of tangled with personal spen”
“I have been having such an issue with Etsy verifying my taxpayer information due to my drivers license having a different name than my Social Security card. I recently changed my name to match on my Social Security card and drivers license, but Etsy is still giving me issues and their customer service is a nightmare. One second I will get an email saying that my info has been verified, and then the next second I get an email saying my account is frozen or suspended. I don't even actually kno”
“LLC approved, go to irs site to get an EIN and it errors and gives reference code 101. Call and they say due to the volume of calls for your reference code we can’t take your call. Call again later. WTF? submitted by /u/Dense-Passage688 [link] [comments]”
“If my principal office is in a county outside of the 5 boroughs, but all of my business (earned income) is within the 5 boroughs, does that mean I still have to use form NYC-3L for my city returns or can I use the other ones? submitted by /u/juvenescence [link] [comments]”
“I see you use WealthSimple Tax as the backstop at the end of the process. I already use WealthSimple Tax (since they bought out Simply Tax in 2020 or whatever) and they have a number of automatically added deductions that you can apply in their own wizard. What would I be missing from your product by going directly to WealthSimple, from a deductions standpoint?”