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Late Filing Penalties

The final deadlines for calendar year tax returns are approaching. If you just can’t make it, or if you already filed late, you may be wondering what the penalties are and your options to avoid having to pay these penalties.

► S Corporations - $195 per shareholder per month or part of month, to a maximum of 12 months.

►  Partnerships - $195 per partner per month or part of month, to a maximum of 12 months.
 

► C Corporations – 5% of the net tax for each month or part of a month the return is late, up to 25%.
 

► Individuals – 5% of the tax required to be shown on the return, per month or part of month, up to 25%
 

► Exempt organizations - $20 per day

► Employee benefit plans - $25 per day to a maximum of $15,000, plus DOL penalties.

The IRS is very efficient at assessing these penalties. If you file late, you can expect to receive a notice from the IRS.
 
If you receive such a notice, you have a few options. One is to request the first time penalty abatement. You have to have a “clean record” and as the name implies, you only get this once. Another option is to claim reasonable cause, if you have reasonable cause for filing late.
 
For an individual return, even if you can’t pay, you should file. Late payment penalties are substantially lower than late filing.
 
Due to IRS understaffing, calling the IRS can result in wait times of over an hour, but it is the most efficient way to address these issues.
 
If you are facing a late filing penalty and don’t know how to proceed, give us a call. We may be able to help.