Late Filing Fee For Partnership & S-Corporation Returns Soar

Start­ing in 2010 the late fil­ing fee for Part­ner­ship returns (Form 1065) and for S-corporation returns (Form 1120S) is increas­ing.  The pre­vi­ous monthly penalty was $89 per month (or part of a month) per share­holder or part­ner; it is now more than dou­bled to $195 per month per part­ner or share­holder.  The penalty can be charged for up to 12 months, which is a pretty hefty price tag for not fil­ing a tax return.

The penalty may be abated it the part­ner­ship or S-corporation can show the fail­ure to file time was due to a rea­son­able cause.  There are pro­ce­dures to address these penal­ties assum­ing the entity is domes­tic, has a small num­ber of part­ners or share­hold­ers, and the indi­vid­u­als in ques­tion are nat­ural per­sons who have reported all their income from the busi­ness with timely filed tax returns and this fail­ure to file timely is not an ongo­ing prob­lem.  If the part­ner­ship or S-corporation has made a habit of fail­ing to file, do not expect penalty abatement.

Really, the eas­i­est way to han­dle this issue is not to file late in the first place. For many S-corporations and Part­ner­ships no tax is due; these forms are infor­ma­tion returns that tell the indi­vid­ual part­ners and share­hold­ers their dis­trib­u­tive share of income and expenses.

  • Part­ner­ship tax returns are due April 15 for calendar-year partnerships
  • OR the 15 of the fourth month after the close of the fis­cal year for fiscal-year partnerships,
  • S-corporation tax returns for calendar-year S-corporations are due March 15
  • OR the 15th of the third month after the close of the fis­cal year for fiscal-year S-corporations.
  • If the 15th falls on a week­end or bank hol­i­day the due date is the next busi­ness day, there­fore in 2010 the S-Corporation tax return is due March 15, 2010 for calendar-year S-corporations.

Like other tax returns a tax­payer can file a form to extend the time to file, but all taxes are due on the day the tax return is ini­tially due, which means the part­ners or share­hold­ers will have to esti­mate their tax lia­bil­ity includ­ing income from the S-corporation or Part­ner­ship with­out falling short in order to avoid the fail­ure to pay penalty along with inter­est.  Form 7004 can be to file for the exten­sion to file Form 1065 or Form 1120S. The Form 7004 must be filed on or before the orig­i­nal due date or the Form 1065 or Forms 1120S.

Form 7004 will give an auto­matic 6-month exten­sion to file Form 1120S (S-corporation) returns, but will only grant a 5-month exten­sion to file Form 1065 (Part­ner­ship) returns.  In 2010 all Forms 1065, and Forms 1120S for which an exten­sion (Form 7004) was filed will be due Sep­tem­ber 15, 2010.

As always, small busi­ness ser­vices and tax­a­tion are our busi­ness.  If you need help com­plet­ing your part­ner­ship tax return or S-corporation tax return or need help attempt­ing to get your penalty abated, Please give Art & Busi­ness Con­sult­ing a call.  We would love to engage you as a client.

The usual dis­claimers: Although ABC has made every effort to insure the accu­racy of Taxes, Tips and Tools, mis­in­for­ma­tion, dis­in­for­ma­tion, changes, mis­takes, typos and hack­ers hap­pen, there­fore Art & Busi­ness Con­sult­ing LLC takes no respon­si­bil­ity for any action taken or results based on the infor­ma­tion sup­plied here in.  Inter­nal Rev­enue Ser­vice Cir­cu­lar 230 Dis­clo­sure:  As pro­vided for in Trea­sury reg­u­la­tions, advice (if any) relat­ing to fed­eral taxes that is con­tained in this com­mu­ni­ca­tion (includ­ing attach­ments) is not intended or writ­ten to be used, and can­not be used for the pur­pose of (1) avoid­ing penal­ties under the Inter­nal Rev­enue Code or (2) pro­mot­ing, mar­ket­ing or rec­om­mend­ing to another party any plan or arrange­ment address herein.  Art & Busi­ness Con­sult­ing LLC cur­rently does not have a cer­ti­fied pub­lic accoun­tant or an attor­ney on staff; this infor­ma­tion is purely for edu­ca­tional pur­poses and not to be con­strued as legal or finan­cial advice.  Art & Busi­ness Con­sult­ing LLC and its employ­ees, mem­bers and asso­ciates are not engage to prac­tice law; you always should dis­cuss legal mat­ters with your attor­ney before talk­ing to any­one else.

4 Responses to “Late Filing Fee For Partnership & S-Corporation Returns Soar”

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  1. Anisa Azzaro says:

    Thank you for an awe inspir­ing read. I much enjoyed this arti­cle. I look for­ward to read­ing more about taxes. If this had a rat­ing I would have to say 10 stars

  2. I heard taxes described as many things: dry, bor­ing, inevitable, frus­trat­ing, con­fus­ing, but awe inspir­ing is not a term oft applied to this sub­ject. :) There­fore I think you must be com­pli­ment­ing my writ­ing style in gen­eral. Thanks. — Jake

  3. Jacob says:

    Where are your cita­tions to these num­bers? I’ve searched IRS.gov for bul­letins, pub­li­ca­tions and their ilk and can­not find your numbers.

  4. Dear Jacob
    Had a tough time find­ing a cita­tion for a post I wrote 7 months ago. Have no idea what my source was, I read a lot of stuff: Kiplinger, NAEA News,IRS Newswire plus attend sem­i­nars etc, Tax­a­tion is very much a mov­ing tar­get and stay­ing abreast of changes requires a lot of con­tin­u­ous research and education.

    This IRS link con­firms the part­ner­ship fail­ure to file penalty.
    http://www.irs.gov/formspubs/article/0„id=210603,00.html
    Here is the IRS S-corporation link
    http://www.irs.gov/formspubs/article/0„id=210604,00.html

    As always, small busi­ness ser­vices and tax­a­tion are our busi­ness. If you need help Please give Art & Busi­ness Con­sult­ing a call. We would love to engage you as a client.

    Jake Beck­man EA

    The usual dis­claimers: Although ABC has made every effort to insure the accu­racy of Taxes, Tips and Tools, mis­in­for­ma­tion, dis­in­for­ma­tion, changes, mis­takes, typos and hack­ers hap­pen, there­fore Art & Busi­ness Con­sult­ing LLC takes no respon­si­bil­ity for any action taken or results based on the infor­ma­tion sup­plied here in. The con­tent of this blog gen­er­ally applies to busi­ness and indi­vid­ual tax­a­tion in the United States of Amer­ica. Inter­nal Rev­enue Ser­vice Cir­cu­lar 230 Dis­clo­sure: As pro­vided for in Trea­sury reg­u­la­tions, advice (if any) relat­ing to fed­eral taxes that is con­tained in this com­mu­ni­ca­tion (includ­ing attach­ments) is not intended or writ­ten to be used, and can­not be used for the pur­pose of (1) avoid­ing penal­ties under the Inter­nal Rev­enue Code or (2) pro­mot­ing, mar­ket­ing or rec­om­mend­ing to another party any plan or arrange­ment address herein. Art & Busi­ness Con­sult­ing LLC cur­rently does not have a cer­ti­fied pub­lic accoun­tant, human resource spe­cial­ist, cer­ti­fied finan­cial plan­ner or an attor­ney on staff; this infor­ma­tion is purely for edu­ca­tional pur­poses and not to be con­strued as legal or finan­cial advice. Art & Busi­ness Con­sult­ing LLC and its employ­ees, mem­bers and asso­ciates are not engage to prac­tice law; you always should dis­cuss legal mat­ters with your attor­ney before talk­ing to any­one else.