If the S-Corporation tax return is filed late, the IRS will add a tax penalty.
S-Corporation tax returns are generally due on March 15. If an extension is filed, the S-Corporation tax return is due on September 15. When the tax return is filed late the IRS will add a tax penalty based on the number of months late. The tax penalty can be removed under certain circumstances. Learn More on how to remove tax penalty or penalty abatement.
IRC Sec. 6699, filing an S-Corporation return late results in a per month tax penalty of $195 multiplied by the number of shareholders. The number of months cannot exceed 12 months.
The S-Corporation tax return was due on March 15, 20X5. On November 15, 20X5 the return was filed. An extension was not filed. Therefore, the return was filed 8 months late. There are two shareholders. The late filing tax penalty is $3,120. (8 * 2 * 195)
|Number of shareholders||2|
|Late filing penalty||195|
It is important to understand that even if the S-Corporation does not owe taxes, the IRS will charge a tax penalty for filing late. You may qualify for tax penalty relief if your accountant did not properly file for an automatic 6 month extension or simply filed the S-Corporation return late.
IRS Circular 230 Disclosure: To the extent this writing contains advice on a federal tax issue, the advice is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication.