Fines and Penalties for Late Filing S Corporation and Partnership Returns

Written by:
Doug Zandstra CPA, CFE, EA
Certified Public Accountant
Certified Fraud Examiner
Enrolled Agent
29 Pearl St NW, Ste 225
Grand Rapids, MI  49503
616 970 3000
dougzandstra.com
email dougzandstra@gmail.com


So you are going to set up a new business.  An LLC is one of the most common forms of entities.  What happens when you register and apply for an Employer Identification Number with the IRS?  

Well, you give them little bits of information, and they give you a number.  They also tell you what form you need to file and when.  

What happens if this is not the form that you expected to fill out?  What do you do? 

I can tell you what not to do - and that is to not send in the form that they are expecting.  If you apply to be an LLC, and you are instructed to submit a 1065, then do not send in a 1120S.  The late filing clock starts the day after the return is (was) due.  

Think about it, when you applied for that EIN, you gave them some personal information including your name, address and your social security number.  They gave you an EIN and your filing requirements.  If you do not file the return that they are expecting you will get one of these nasty little notices that I have below.  CP162

So what are the penalties?  

Well - if you registered to be an S Corporation or a Partnership, the are $195 per partner, per month.

There are elections and things that you can do when you are registering your business to notify the IRS that you are intending to file something other than what your initial registration is, but these elections must be made timely, and following established procedures.  

Avoid penalties.  File the returns that you registered for.  Document that you made elections timely.

Business registrations are mostly computerized, when you register, your application is processed by a computer, and making changes requires human interaction.  

So be careful because these little notices are generated by that same computer.