corporate extension

[TKTax]

Found client's form 7004 in file. Thought it had been mailed. Will a fileing the late extension now stop the bleeding on a no-tax due 1120S?

[JohnH]

No it won't.

Nothing will stop the bleeding but the return.

After the fact, you may be able to remove the scar with a letter, provided it's moving enough to make someone at IRS cry.

[rfassett]

Agree with JohnH. Also, the late filing penalty for an S has nothing to do with tax liability. It is $195 per shareholder per month (or fraction of month) during which the failure to file continues - up to 12 months. So in another seven days you will be at $390 for just a single shareholder S. Multiply that by the number of shareholders at any time during the year and you can see it can be a hurt pretty quickly. You should also be aware that these penalty abatements are getting harder to get. It used to be you got them just for asking. But now you better have a pretty compelling cause. Good luck!

[TAXBILLY]

I have proceeded as follows with some success:

1) File the return as soon as possible. Do not put in an explanation. No one will read it.

2) When the penalty letter arrives answer promptly and fess up that you, the preparer and not the corporation, messed up inadvertently.

3) And, if it is true, emphasize that the corporate returns previously were filed and/or extended within the rules.

taxbilly

[michaelmars]

there is an exemption to the penalty as long as all shareholders sign off that they received the info timely enought for them to meet their filing obligations. I have used it a few times for partnerships and just can't recall if i ever had for an S corp but the theory is the same. I just recall its a regulation 66xx that lets you get away with this.

[rfassett]

Michael, as much as I would love to agree with you, I can not. The rev proc to which you refer does not apply to S-Corps.

[TKTax]

Thanks for all the replies. Sounds like I'm screwed. I think I will try Taxbilly's tactic.

Tim

[ILLMAS]

Just attach a 7004 to the front of the federal tax return, has worked for many years. Remember you mailed out via regular mail on March 15, 2011, that's all.

[michaelmars]

Michael, as much as I would love to agree with you, I can not. The rev proc to which you refer does not apply to S-Corps.

i wasn't sure but and didn't take the time to research, so thank you for the info. I do wonder though if you sent it in with a letter requesting abatement, would whoever read it know what you know?