S Corp Late Filing Penalty

Technical topics regarding tax preparation.
#1
swgordon  
I have a client that does not have their stuff together as we are waiting on calculations from their Retirement Plan TPA.

I can either file today and amend or not file and file next week once I have what I need.

I am leaning towards not filing but wanted to confirm one thing regarding the penalty.

They are under extension. If I file them next week, will the penalty be calculated as $200 x 1 month late from the extended due date or or will it be 7 months late from the original due date?
 

#2
TrueTax  
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Under IRC 6699, the penalty is calculated "for each month (or fraction thereof) during which such failure continues" where the "failure" is a failure "to file such return at the time prescribed therefor (determined with regard to any extension of time for filing)" (IRC 6699(a)(1)). So the penalty is counted from the extended and not the original deadline for federal purposes.

However, state law may be different. For example, in California, if you miss the extended deadline, you have to calculate the penalty going back to the original due date.
 

#3
swgordon  
OK thank you. VA is due 10/15 so i have another month for them.
 

#4
taxnoob  
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If it is the first time that the client is late, you can always try to get the penalty abated through first time PA.
 

#5
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"File today and amend"

I dont allow this approach with my clients. Are we not certifying that the return is correct and complete to the best of our knowledge?
 

#6
Derby  
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Flint, MI
So you require late filing of a return? The IRC doesn't say "you can file late if you don't have all your information."

Are there any rev procs or court cases addressing what to do if you can't make a reasonable estimate of your info?
 

#7
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Chicago, IL
"File today and amend"


My fee for amending a corporate tax return is starting at $500 and will most likely be significantly higher. Guess it depends on how many shareholders there are to make this option worthwhile.
 

#8
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Derby wrote:So you require late filing of a return?


I might be misunderstanding you. Are we discussing blame?

I'm requiring that we file what is known to be an accurate tax return.

And that I must certify that I know it to be complete and correct to sign it.

It's not late because of that.

It's late because tax compliance is far down on the priority list of the client and he cannot provide the required information by the deadline.

That's not me "requiring that it's filed late".

(if the preparer was slow to work on it, it may be the preparer's fault, but he still cant file what he knows to be wrong)
 


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