What if I don't file the 5742 form for an inactive LLC?

[resident101]

Hi all, long story short,

I have an LLC I registered in October 2020. I didn't have any activity what so ever on it. I didn't even open a bank account. My entity is a foreign-owned, I am not a US resident, not a US citizen and I am not ETBUS.

The form 5742 is to be filed if your company had "Reportable Transactions" and you don't have to file it if you didn't have any of these transactions.

Well I (perhaps incorrectly) assumed that since my business was totally inactive I didn't have to file the 5742 because there were no transactions. I didn't file a 1120 either (same reason)

Now, 9 weeks after the due date for 5742 (it was 15th April) I discovered that maybe the initial filing fee that I paid to form my LLC may count as a Reportable Transaction. I just read something online, I didn't receive any notice from the IRS, at least not yet.

Did you have to deal with anything like this before? What do I do? Call the IRS? Or it's better if I speak to an attorney first? Or do I just let it go and move on with my business?...

It's brutal I might be liable for 25K because of something like this.

Any input will be greatly appreciated!



Best

 

[kranj99]

I was in a similar situation - I never did file the 5742. I just ended up closing my LLC, less than 1 year into its operation as I just never got around using it. There was no IRS follow up or anything. If your EIN was never used (i.e no bank's registering it etc.) then the IRS is not going to waste their limited investigative resources on something not worth their time and effort! So I think in your case, if you don't have a bank account, no transactions, you are not a US Resident/Citizen, the IRS is unlikely to assign a $25K fine onto you. These fines are for big offenders and after multiple violations at that. That said, if you're not going to use your company, I'd suggest just to close it down. You can always start up a new one, once your business is more on solid footing.

 

[resident101]

Hey Kranj99 thank you for your reply!
Yeah what you say makes sense and it's good to hear someone went through the same, honestly I was getting seriously paranoid.
I wouldn't mind to keep the LLC but I have to renew pretty soon, so perhaps I will just shut it down.
I am still not sure if I should call the IRS, on one hand it would show that I tried to comply with the rules, on the other hand it would put me on the radar, perhaps something unnecessary..
Anyhow, thanks for your input, you really calmed my nerves here
Best!

 

[Fulton Abraham Sanchez]

Hi all, long story short,

I have an LLC I registered in October 2020. I didn't have any activity what so ever on it. I didn't even open a bank account. My entity is a foreign-owned, I am not a US resident, not a US citizen and I am not ETBUS.

The form 5742 is to be filed if your company had "Reportable Transactions" and you don't have to file it if you didn't have any of these transactions.

Well I (perhaps incorrectly) assumed that since my business was totally inactive I didn't have to file the 5742 because there were no transactions. I didn't file a 1120 either (same reason)

Now, 9 weeks after the due date for 5742 (it was 15th April) I discovered that maybe the initial filing fee that I paid to form my LLC may count as a Reportable Transaction. I just read something online, I didn't receive any notice from the IRS, at least not yet.

Did you have to deal with anything like this before? What do I do? Call the IRS? Or it's better if I speak to an attorney first? Or do I just let it go and move on with my business?...

It's brutal I might be liable for 25K because of something like this.

Any input will be greatly appreciated!



Best

Your company filing LLC is not a reportable transaction. You did not pay it to the company LLC.