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  Year Round Tax Service

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S Corp Failure-to-File Penalty - It's not too late to file for 2015! 

9/27/2016

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The penalty for failure to file a federal S corporation tax return on Form 1120S — or failure to provide complete information on the return — is $195 per shareholder per month. The penalty can be assessed for a maximum of 12 months.

For example, the monthly penalty for failing to file a calendar-year 2015 Form 1120S for an S corporation with three shareholders is $585 ($195 times 3). If the return remains unfiled for 12 months or more, the maximum penalty equals the monthly penalty multiplied by 12. So the maximum failure-to-file penalty for a three-owner S corporation would be $7,020 ($585 times 12).

Important Note: Many federal tax penalties are assessed based on the amount of tax owed. So these penalties cannot be assessed if the taxpayer doesn’t have positive taxable income and a resulting tax bill. However, the S corporation failure-to-file penalty can be assessed whether the S corporation produces positive taxable income or not.

​Therefore, filing S corporation returns can’t simply be ignored because no tax is owed.
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    Heather McTavish

    I am passionate about sharing ways to save you time and $  with  your small business accounting.

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