What Is IRS Notice 2022-45 Penalty Relief?

IRS Notice 2022-45 was administrative guidance that provided penalty relief for certain international information returns. The notice offered a remedy for taxpayers who had not filed these specialized forms on time for particular tax years. The notice established a framework for penalty abatement for taxpayers who had not filed certain returns when the guidance was issued. It provided a limited window of opportunity to come into compliance without incurring the penalties for late filing. As the deadline for this relief has passed, the program is no longer active.

Eligibility for Penalty Relief

Eligibility for the penalty relief under Notice 2022-45 was narrowly defined. The relief was available for international information returns for the 2019 and 2020 tax years. To qualify, the required returns for these years must not have been filed by the date the notice was issued.

The relief applied to a specific list of international information returns, including:

• Form 5471, “Information Return of U.S. Persons With Respect to Certain Foreign Corporations,” used by U.S. citizens and residents who are officers, directors, or shareholders in certain foreign corporations.
• Form 5472, “Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business,” which reports transactions between a U.S. corporation and its foreign owners.
• Form 3520, “Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts,” a form for U.S. persons to report transactions with foreign trusts or receipt of large gifts from foreign persons.
• Form 3520-A, “Annual Information Return of Foreign Trust With a U.S. Owner,” which provides information about a foreign trust, its U.S. beneficiaries, and any U.S. person treated as an owner.

Scope of the Penalty Abatement

The relief provided under the notice targeted only penalties for the failure to file the eligible international information returns on time. These penalties can be substantial; for example, the penalty for a late Form 5471 starts at $10,000 per return. Similarly, penalties for a late Form 3520 can be the greater of $10,000 or a percentage of the transaction amount.

This relief was automatic for qualifying taxpayers, meaning they did not need to submit a separate request or reasonable cause statement. The notice did not waive other types of penalties, such as those for failure to pay income tax liability. It also did not cover penalties related to fraud or accuracy-related penalties. The focus was strictly on the act of filing the information return late.

Action Required to Obtain Relief

To secure the penalty relief, taxpayers were required to file the delinquent international information returns covered by the notice. All correct and complete 2019 and 2020 information returns eligible for the relief had to be filed on or before September 30, 2022.

Because this deadline has passed, the relief program under Notice 2022-45 is no longer available. Missing the deadline meant the taxpayer would not qualify for the relief under this specific notice.

Post-Filing Abatement and Refund Process

The notice outlined a clear process for how relief would be administered after a taxpayer filed the required returns by the deadline. The procedure depended on whether penalties had already been assessed or paid, and the system was designed to be automatic.

For taxpayers who had been assessed a failure-to-file penalty but had not yet paid it, the IRS automatically abated the penalty from their account once the delinquent 2019 or 2020 return was filed. This meant the liability would disappear from their account without further action.

If a taxpayer had already paid the penalty for a late-filed return, the IRS initiated a refund. These payments were automatically refunded or credited against an outstanding tax liability, and taxpayers did not need to file a refund claim.