How often does the IRS actually abate a Form 5472 penalty after assessing it?

The National Taxpayer Advocate's 2024 Annual Report contains the most rigorous public data on section 6038A penalty outcomes. Averaged across 2018 through 2021, the IRS later abated 74% of the most frequently assessed sections 6038 and 6038A penalties by count, and 84% by dollar value. That gap (84% vs 74%) means the highest-dollar penalties are abated at an even higher rate than the median. The NTA also reported that 83% of these systemic business penalties were assessed against small and midsize businesses — exactly the population that benefits from CCA 202617012's small-corp reasonable-cause framework.

Most abatements rely on one of two grounds: 'reasonable cause' (a written showing under penalties of perjury that the filer acted in good faith and had reasonable cause, often citing lack of knowledge, reliance on a tax professional, isolated incident, or extraordinary circumstances) or 'First-Time Abatement' (administrative relief available to taxpayers with a clean three-year prior-compliance record). For foreign-owned LLC owners who did not know Form 5472 existed and have no prior IRS contact, both grounds are typically available.

The reasonable-cause letter is a written statement under penalties of perjury — substantively a one-to-three-page document explaining the facts, the standard you are asking the IRS to apply, and your supporting documentation. Competent self-representation is feasible if the facts are clear. A CPA or tax attorney adds value when the facts are mixed (you do have some U.S. activity, you did receive prior IRS correspondence, or you have several years of missed filings), when the IRS rejects your first request and you need to escalate to Appeals, or when the amount involved makes professional fees small relative to the exposure. For a single-year $25,000 penalty with clean facts, the DIY path with NTA data and CCA 202617012 cited is reasonable.