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IRS S Corporation Late Filing Tax Penalty

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

IRS Internal Revenue Code (IRC) Section

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.

IRS Tax Penalty Calculation Example

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)

Months Late 8
Number of shareholders 2
Late filing penalty 195
Total Penalty 3,120

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.


James Balay 14-04-2013, 00:34

I didn't know there was a late penatly for not filing. We have two share holders, a family run business. We didn't make a profit , and my wife was sick with caner so I kind of lost track of everything. Charging me me for 2010 and 2011 almost $10,000 dollars. I did the letter to them they denied it. Appeal is next. Let me know if you can help and the costs. Thanks Jim Balay

A.J. Gross 24-04-2013, 20:18

We received your comment on the blog. Could you sent us a copy of the letter you mailed to the IRS? We will review the letter first then we can discuss your options. Just from the information you have provided me so far, you should have qualified for penalty abatement.


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