How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Robin D. Your Own Question
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15597
Experience:  15years with H & R Block. Divisional leader, Instructor
14155347
Type Your Tax Question Here...
Robin D. is online now
A new question is answered every 9 seconds

my sub S corporation did not file for an extension but filed

Customer Question

my sub S corporation did not file for an extension but filed the return on 09/24/11.
S corp did not have any activity no income no losses. No taxes due. IRS is sending notices that I the only officer personally owe $135 for evvery month that the return not filed.
Submitted: 4 years ago.
Category: Tax
Expert:  Robin D. replied 4 years ago.

Robin D. :

Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.
Unfortunately, when S corporations fail to file Form 1120S by the due date or by the extended due date, the IRS will impose a minimum penalty of $195 for each month or part of the month the return is late multiplied by the number of shareholders.
The penalty for not paying is based on any amount of tax due and not paid on time.

Robin D. :

An S corp can request abatement of the penalty. An S corp is also allowed the first time abatement for penalties.

Robin D. :

This refers to if the S corp has never requested abatement in the past and this is the first time they have needed to request the relief.

Robin D. :

Asking for abatement of the penalty can be as easy as calling the number on the notice and speaking with the agent.

Robin D. :

As the penalty the IRS is assessing is on the late filing and no tax due then you can request they abate the penalty and when you request the penalty abatement you would want to bring to their attention that the S corp has not made this request in the past and is generally compliant with tax filing and business practices (as long as the S corp is and has been on top of any filings in the past).

Robin D. :

My goal is to give you excellent service. If you are satisfied, please rate me. If you have follow-up questions on this same topic, use the reply box below. To start a new conversation with me on a new topic request me again.

JACUSTOMER-kdc6p65m- :

Why is there a penalty if no tax was due?

Robin D. :

The penalty is just for not filing on time. This is a set penalty and is not dependent on any tax due. Please make sure you read the section about asking for abatement. The IRS is allowed to over look collecting the penalty. The request is simple.

Robin D. :

Is your thinking that I should have advised that the iRS has no legal standing to assess the penalty on the S corp?

Robin D. :

The penalty was automatically applied because the S corp neither requested extension nor did it file on time. The penalty can be abated and that good news should be helpful to you.

Robin D. :

Please let me know if you need more information on how to request the abatement and not pay the penalty.

Robin D. :

The law on the penalty just for not filing on time is found under IRC 26 USC 6699
http://www.law.cornell.edu/uscode/text/26/6699