What the IRS actually accepts as reasonable cause

A late Form 5472 penalty is relieved through reasonable cause under Treas. Reg. §1.6038A-1 — a showing that the failure was due to reasonable cause and not willful neglect.

First-Time Abate generally does not apply to Form 5472, because it's an event-based filing requirement rather than a recurring return. A clean filing history alone will not clear it.

What a statement has to do

It has to explain, in the taxpayer's own facts, why the return was late, what the taxpayer knew about the section 6038A rules at the time, and how promptly they complied once they learned of the requirement. Generic language does not carry it — which is why the statement is written for your circumstances, not from a template.

CCA 202617012 and small companies

A Chief Counsel memo released in April 2026 (CCA 202617012) discusses a reasonable cause standard for small corporations — broadly, $20 million or less in gross receipts, limited presence in and contact with the United States, no knowledge of the section 6038A rules, and prompt compliance once contacted. It is nonprecedential and not automatic relief, but it describes the situation most late filers are in.