On June 9, 2011, the IRS announced that the duplicate filing requirement for Form 5472 will no longer be required. In T.D. 9529, 76 Fed. Reg. 33997 (6/10/11), the IRS explained that duplicate reporting in the Form 5472 context is no longer necessary due to technological advances in electronic processing and data collection. Form 5472, Information Return of a 25 Percent Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, must be filed by 25% foreign-owned domestic corporations and foreign corporations engaged in a trade or business in the United States. Previously, duplicate copies of Form 5472 had to be filed with the Philadelphia (and later, the Ogden, Utah) IRS Center. Under the 2004 temporary regulations, the duplicate filing requirement would have been deemed satisfied if Form 5472 was timely filed electronically. The 2011 temporary regulations remove the duplicate filing requirement altogether, regardless of whether the form is filed electronically.
The IRS’s recognition of the superfluity of duplicate reporting coincided with a major milestone. In this, the 25th year of the e-file program, the IRS received and processed its billionth Form 1040. The billionth return milestone signals that the return filing paradigm has indeed shifted. I would point out, however, that the shift has been and will continue to be a gradual one characterized by incremental steps that mirror the development and availability of technological advances. Consider, for instance, the fact that, at one point in time, an IRS employee would have had to turn on an external modem manually just to receive an electronic return that had been converted from an original paper return.
The removal of the Form 5472 duplicate filing requirement is such an incremental step. While embracing the e-file paradigm and modifying existing information reporting requirements for certain corporations, the 2011 temporary regulations nonetheless acknowledge the current lack of procedures for the electronic filing of Form 5472 independent of an electronically filed income tax return. In fact, Form 5472 must be timely filed, even if the reporting corporation’s income tax return is not, which means that a separate hard copy must be timely filed with the IRS where the income tax return is due. The IRS didn’t explain why there are no such procedures, but given the reliance on paper information returns in lieu thereof, it sounds like a technological limitation to me.
This caveat is, admittedly, likely of little concern for most multinational corporations with U.S. reporting obligations nowadays (compared to certain other obligations looming on the horizon — hopefully that reporting can all be done electronically), but it is nonetheless illustrative of the incremental nature of the e-filing paradigm shift. It may not necessarily be the next step, but should the IRS provide for the independent electronic filing of information returns such as Form 5472, it would be a step in the right direction.
--Benjamin A. Jung, U.S. International Tax Law Editor
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