Discussion:GOOD Reasons for late filing of 1120S
From TaxAlmanac
Discussion Forum Index --> Tax Questions --> GOOD Reasons for late filing of 1120S
Donniecastleman (talk|edits) said: | 4 September 2007 |
| Hey guys, I'm sure someone can just rattle off the reasons but I have a friend who is NOT a tax client that hasn't filed his 1120S yet and the IRS is of course charging penalties as we speak, what are the most likely reasons he could use to get out of the penalty. His paperwork over tax year 2006 is a complete mess and he's having to reconstruct a lot of records because of two moves, but is there a way to word it where the IRS will waive the penalties? Thanks, this is just the beginning of his problems, including not doing any 941's or the 940 for 2007 either, should I recommend he go back and file a schedule C for another year and file the S corporation return with nothing flowing through it to save on penalties? Because of his lack of ability to keep good records, should he scrap the S corporation altogether? | |
| 4 September 2007 | |
| To have penalties waived, the taxpayer has to show he exercised ordinary business care and prudence. Your guy has apparently shown a continued pattern of screwing up. | |
Donniecastleman (talk|edits) said: | 4 September 2007 |
| I agree, he just had no idea that you can't throw everything together the night before you do your tax return and that there has to be a good effort to take good care of your books and records, to save on penalties and sanity as well at the end of the year. | |
| 4 September 2007 | |
| Prepare 1120s with estimated amounts. You can do that. You can amend it later if needed. | |
Donniecastleman (talk|edits) said: | 4 September 2007 |
| thanks DZ, even if he hasn't filed any 941's for the year? i'm just trying to give him the best advice without running up thousands of dollars in penalties. | |
| 4 September 2007 | |
| You might put the wages he should have taken on Sch C instead. It ain't pretty, but gets the FICA paid. | |
| 4 September 2007 | |
| No wages = No FICA. Do not do schedule C, he is a corp. Filing a schedule C would be wrong. Get him on track for 2007!! | |
Donniecastleman (talk|edits) said: | 4 September 2007 |
| I agree, my whole point of talking to this guy was to try and lower his audit risk, I definitely wouldn't throw a schedule C in the mix on top of a K1. | |
| 4 September 2007 | |
| Audit risk is very low. Have not seen a S corp audit in years. Do not worry about audits. The taxpayer has no clue on record keeping and a audit might kick him in the butt and move him in the right direction. | |
Death&Taxes (talk|edits) said: | 4 September 2007 |
| I am sure that when JR wakes up he will tell you there are no penalties for a late 1120S. | |
| September 4, 2007 | |
| Was waiting for someone to note that. Thanks DT. And, Beth isn't steering you completely wrong. If he's got a lot of income and didn't do PR, a way to mitigate the problem to some degree is to dump some SE income onto a Sch. C and call it wages out of the corp. Agree that it's not our best move, but gets some SS paid. | |
SCOTTCCOYLE (talk|edits) said: | 7 September 2007 |
| I thought the only penalty for late filing of an s-corp was $50 for each K-1. I have a client who owns an S- corp 100% and we're having trouble getting it finished by the deadline. His soon to be ex-wife was his bookkeeper. If he is the only shareholder and doesn't complain that he received his K-1 late will a penalty be imposed? | |
SCOTTCCOYLE (talk|edits) said: | 7 September 2007 |
| What are the penalties for filing a late S-corp return with no tax due? | |
| September 7, 2007 | |
OK, so if I've got three shareholders...but Paul, what about their W2's that are late? 
| |
| September 7, 2007 | |
| Good catch, JR1. I forgot about that. Take the result of the formula above, and muliply that by the number of months that the W2's are late, and then divide that by the total compensation not reported on the W-2's, and multiply by their state unemployment rate. | |
Death&Taxes (talk|edits) said: | 7 September 2007 |
| then divide by the square root of the population of Mexico, Maine. | |
- Posts from non-taxpros have been moved here, along with related responses.
| 12 September 2008 | |
| IRS instructions for form 1120-S:
Late filing of return. A penalty may be charged if the return is filed after the due date (including extensions) or the return does not show all the information required, unless each failure is due to reasonable cause. If the failure is due to reasonable cause, attach an explanation to the return. For returns required to be filed after December 20, 2007, on which no tax is due, the penalty is $85 for each month or part of a month (up to 12 months) the return is late or does not include the required information, multiplied by the total number of persons who were shareholders in the corporation during any part of the corporation's tax year for which the return is due. If tax is due, the penalty is the amount stated above plus 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax, or if the return is more than 60 days late, a $100 minimum or the balance of the tax due on the return, whichever is smaller. | |
| 1 January 2009 | |
| I suppose the code was changed to authorize this?
And a 2006 return was required to be filed 3/15/07, so is not subject to this penalty? | |
- Posts from non-taxpros have been moved here, along with related responses.
