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C-Corp returns with zero taxable income not filed for ten years, will there be interest on the late filing penalties?
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caj11
May 23, 2013, 11:35:58 AM5/23/13
to
Hi there,
Client of mine is the sole shareholder of a C-Corp and did not file returns for the past ten years. In seven of those years, the C-Corp has posted a loss. In the other three years, loss carry-forwards are sufficient to zero out the profits. So net income was always zero and tax due was always zero.
I looked in the instructions for the Form 1120 for the various years, and it appears that if a corporate return is more than 60 days late and the taxpayer owes no tax, there is a fixed penalty, which is $100 for the earlier years and then $135 for the later years.
My question is, does the IRS charge interest on this unpaid penalty? The instructions don't indicate anything about this and the IRS website is no help.
Thanks,
Chris Johnson, EA
--
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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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Client of mine is the sole shareholder of a C-Corp and did not file returns for the past ten years. In seven of those years, the C-Corp has posted a loss. In the other three years, loss carry-forwards are sufficient to zero out the profits. So net income was always zero and tax due was always zero.
I looked in the instructions for the Form 1120 for the various years, and it appears that if a corporate return is more than 60 days late and the taxpayer owes no tax, there is a fixed penalty, which is $100 for the earlier years and then $135 for the later years.
My question is, does the IRS charge interest on this unpaid penalty? The instructions don't indicate anything about this and the IRS website is no help.
Thanks,
Chris Johnson, EA
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
Pico Rico
May 23, 2013, 12:39:18 PM5/23/13
to
"caj11" <ca...@my-deja.com> wrote in message
news:84a6b9e2-a52a-453c...@googlegroups.com...
> Hi there,
>
> Client of mine is the sole shareholder of a C-Corp and did not file
> returns for the past ten years. In seven of those years, the C-Corp has
> posted a loss. In the other three years, loss carry-forwards are
> sufficient to zero out the profits. So net income was always zero and tax
> due was always zero.
>
> I looked in the instructions for the Form 1120 for the various years, and
> it appears that if a corporate return is more than 60 days late and the
> taxpayer owes no tax, there is a fixed penalty, which is $100 for the
> earlier years and then $135 for the later years.
>
> My question is, does the IRS charge interest on this unpaid penalty? The
> instructions don't indicate anything about this and the IRS website is no
> help.
>
> Thanks,
and what are the chances of begging off the penalties in this situation?
>
> Client of mine is the sole shareholder of a C-Corp and did not file
> returns for the past ten years. In seven of those years, the C-Corp has
> posted a loss. In the other three years, loss carry-forwards are
> sufficient to zero out the profits. So net income was always zero and tax
> due was always zero.
>
> I looked in the instructions for the Form 1120 for the various years, and
> it appears that if a corporate return is more than 60 days late and the
> taxpayer owes no tax, there is a fixed penalty, which is $100 for the
> earlier years and then $135 for the later years.
>
> My question is, does the IRS charge interest on this unpaid penalty? The
> instructions don't indicate anything about this and the IRS website is no
> help.
>
> Thanks,
paulthomascpa
May 23, 2013, 1:47:48 PM5/23/13
to
"caj11" <ca...@my-deja.com> wrote
> Client of mine is the sole shareholder of a C-Corp and did not file
> returns for the past ten years. In seven of those years, the C-Corp has
> posted a loss. In the other three years, loss carry-forwards are
> sufficient to zero out the profits. So net income was always zero and tax
> due was always zero.
>
> I looked in the instructions for the Form 1120 for the various years, and
> it appears that if a corporate return is more than 60 days late and the
> taxpayer owes no tax, there is a fixed penalty, which is $100 for the
> earlier years and then $135 for the later years.
>
> My question is, does the IRS charge interest on this unpaid penalty? The
> instructions don't indicate anything about this and the IRS website is no
> help.
>
> Thanks,
I don't believe they would charge interest, or at least the interest clock
> returns for the past ten years. In seven of those years, the C-Corp has
> posted a loss. In the other three years, loss carry-forwards are
> sufficient to zero out the profits. So net income was always zero and tax
> due was always zero.
>
> I looked in the instructions for the Form 1120 for the various years, and
> it appears that if a corporate return is more than 60 days late and the
> taxpayer owes no tax, there is a fixed penalty, which is $100 for the
> earlier years and then $135 for the later years.
>
> My question is, does the IRS charge interest on this unpaid penalty? The
> instructions don't indicate anything about this and the IRS website is no
> help.
>
> Thanks,
doesn't start, till the penalty is assessed and billed. So the initial
notice would have the penalty assessed, plus interest from the assessment
date. This is different than a tax due notice because the taxes were due on
some earlier date and interest would apply from that date.
Expect there to be similar penalties for unfiled state returns.
--
Paul Thomas, CPA
www.paulthomascpa.com
Watkinsville, Georgia
paultry
May 23, 2013, 2:29:28 PM5/23/13
to
On 5/23/2013 10:35, caj11 wrote:
> Hi there,
>
> Client of mine is the sole shareholder of a C-Corp and did not file returns for the past ten years. In seven of those years, the C-Corp has posted a loss. In the other three years, loss carry-forwards are sufficient to zero out the profits. So net income was always zero and tax due was always zero.
>
> I looked in the instructions for the Form 1120 for the various years, and it appears that if a corporate return is more than 60 days late and the taxpayer owes no tax, there is a fixed penalty, which is $100 for the earlier years and then $135 for the later years.
>
> My question is, does the IRS charge interest on this unpaid penalty? The instructions don't indicate anything about this and the IRS website is no help.
>
> Thanks,
>
> Chris Johnson, EA
>
The way I remember it, and what I'm reading in the 2012 1120
> Hi there,
>
> Client of mine is the sole shareholder of a C-Corp and did not file returns for the past ten years. In seven of those years, the C-Corp has posted a loss. In the other three years, loss carry-forwards are sufficient to zero out the profits. So net income was always zero and tax due was always zero.
>
> I looked in the instructions for the Form 1120 for the various years, and it appears that if a corporate return is more than 60 days late and the taxpayer owes no tax, there is a fixed penalty, which is $100 for the earlier years and then $135 for the later years.
>
> My question is, does the IRS charge interest on this unpaid penalty? The instructions don't indicate anything about this and the IRS website is no help.
>
> Thanks,
>
> Chris Johnson, EA
>
instructions is, "The minimum penalty for a return that is
over 60 days late is the smaller of the tax due or $135."
Zero tax due is smaller than $135, thus the failure to file
penalty will be zero.
caj11
May 23, 2013, 3:14:04 PM5/23/13
to
On Thursday, May 23, 2013 12:39:18 PM UTC-4, Pico Rico wrote:
>
>
> > Hi there,
>
> >
>
> > Client of mine is the sole shareholder of a C-Corp and did not file
>
> > returns for the past ten years. In seven of those years, the C-Corp has
>
> > posted a loss. In the other three years, loss carry-forwards are
>
> > sufficient to zero out the profits. So net income was always zero and tax
>
> > due was always zero.
>
> >
>
> > I looked in the instructions for the Form 1120 for the various years, and
>
> > it appears that if a corporate return is more than 60 days late and the
>
> > taxpayer owes no tax, there is a fixed penalty, which is $100 for the
>
> > earlier years and then $135 for the later years.
>
> >
>
> > My question is, does the IRS charge interest on this unpaid penalty? The
>
> > instructions don't indicate anything about this and the IRS website is no
>
> > help.
>
> >
>
> > Thanks,
>
>
>
> and what are the chances of begging off the penalties in this situation?
>
Slim to none. He should have been filing returns, he is the only shareholder so he can't blame it on anyone else, and never employed any bookkeeper or tax professional. He only has his own ignorance to blame and I don't think the IRS will go for that.
>
>
> > Hi there,
>
> >
>
> > Client of mine is the sole shareholder of a C-Corp and did not file
>
> > returns for the past ten years. In seven of those years, the C-Corp has
>
> > posted a loss. In the other three years, loss carry-forwards are
>
> > sufficient to zero out the profits. So net income was always zero and tax
>
> > due was always zero.
>
> >
>
> > I looked in the instructions for the Form 1120 for the various years, and
>
> > it appears that if a corporate return is more than 60 days late and the
>
> > taxpayer owes no tax, there is a fixed penalty, which is $100 for the
>
> > earlier years and then $135 for the later years.
>
> >
>
> > My question is, does the IRS charge interest on this unpaid penalty? The
>
> > instructions don't indicate anything about this and the IRS website is no
>
> > help.
>
> >
>
> > Thanks,
>
>
>
> and what are the chances of begging off the penalties in this situation?
>
caj11
May 23, 2013, 3:14:19 PM5/23/13
to
On Thursday, May 23, 2013 1:47:48 PM UTC-4, paulthomascpa wrote:
> "caj11" <ca...@my-deja.com> wrote
>
> > Client of mine is the sole shareholder of a C-Corp and did not file
>
> > returns for the past ten years. In seven of those years, the C-Corp has
>
> > posted a loss. In the other three years, loss carry-forwards are
>
> > sufficient to zero out the profits. So net income was always zero and tax
>
> > due was always zero.
>
> >
>
> > I looked in the instructions for the Form 1120 for the various years, and
>
> > it appears that if a corporate return is more than 60 days late and the
>
> > taxpayer owes no tax, there is a fixed penalty, which is $100 for the
>
> > earlier years and then $135 for the later years.
>
> >
>
> > My question is, does the IRS charge interest on this unpaid penalty? The
>
> > instructions don't indicate anything about this and the IRS website is no
>
> > help.
>
> >
>
> > Thanks,
>
>
>
>
>
>
>
> I don't believe they would charge interest, or at least the interest clock
>
> doesn't start, till the penalty is assessed and billed. So the initial
>
> notice would have the penalty assessed, plus interest from the assessment
>
> date. This is different than a tax due notice because the taxes were due on
>
> some earlier date and interest would apply from that date.
>
>
>
> Expect there to be similar penalties for unfiled state returns.
Thanks for the answer. As for the state returns, the corporation is in a state where a minimum tax applies whether you made any money or not, and he is paid up on that, although penalties may still apply.
> "caj11" <ca...@my-deja.com> wrote
>
> > Client of mine is the sole shareholder of a C-Corp and did not file
>
> > returns for the past ten years. In seven of those years, the C-Corp has
>
> > posted a loss. In the other three years, loss carry-forwards are
>
> > sufficient to zero out the profits. So net income was always zero and tax
>
> > due was always zero.
>
> >
>
> > I looked in the instructions for the Form 1120 for the various years, and
>
> > it appears that if a corporate return is more than 60 days late and the
>
> > taxpayer owes no tax, there is a fixed penalty, which is $100 for the
>
> > earlier years and then $135 for the later years.
>
> >
>
> > My question is, does the IRS charge interest on this unpaid penalty? The
>
> > instructions don't indicate anything about this and the IRS website is no
>
> > help.
>
> >
>
> > Thanks,
>
>
>
>
>
>
>
> I don't believe they would charge interest, or at least the interest clock
>
> doesn't start, till the penalty is assessed and billed. So the initial
>
> notice would have the penalty assessed, plus interest from the assessment
>
> date. This is different than a tax due notice because the taxes were due on
>
> some earlier date and interest would apply from that date.
>
>
>
> Expect there to be similar penalties for unfiled state returns.
paultry
May 23, 2013, 4:02:05 PM5/23/13
to
On 5/23/2013 12:47, paulthomascpa wrote:
> I don't believe they would charge interest, or at least the interest clock
> doesn't start, till the penalty is assessed and billed. So the initial
> notice would have the penalty assessed, plus interest from the assessment
> date. This is different than a tax due notice because the taxes were due on
> some earlier date and interest would apply from that date.
>
Failure to File Penalty under IRC 6651(a)(1) accrues
> I don't believe they would charge interest, or at least the interest clock
> doesn't start, till the penalty is assessed and billed. So the initial
> notice would have the penalty assessed, plus interest from the assessment
> date. This is different than a tax due notice because the taxes were due on
> some earlier date and interest would apply from that date.
>
interest from the due date or extended due date of the
return.
http://www.irs.gov/irm/part20/irm_20-002-005r.html#d0e111
Alan
May 23, 2013, 6:53:40 PM5/23/13
to
On 5/23/2013 12:29 PM, paultry wrote:
> On 5/23/2013 10:35, caj11 wrote:
>> Hi there,
>>
>> Client of mine is the sole shareholder of a C-Corp and did not file
>> returns for the past ten years. In seven of those years, the C-Corp
>> has posted a loss. In the other three years, loss carry-forwards are
>> sufficient to zero out the profits. So net income was always zero and
>> tax due was always zero.
>>
>> I looked in the instructions for the Form 1120 for the various years,
>> and it appears that if a corporate return is more than 60 days late
>> and the taxpayer owes no tax, there is a fixed penalty, which is $100
>> for the earlier years and then $135 for the later years.
>>
>> My question is, does the IRS charge interest on this unpaid penalty?
>> The instructions don't indicate anything about this and the IRS
>> website is no help.
>>
>> Thanks,
>>
>> Chris Johnson, EA
>>
>
> The way I remember it, and what I'm reading in the 2012 1120
> instructions is, "The minimum penalty for a return that is over 60 days
> late is the smaller of the tax due or $135." Zero tax due is smaller
> than $135, thus the failure to file penalty will be zero.
>
I agree. No tax due means no penalty. You would get a completely
> On 5/23/2013 10:35, caj11 wrote:
>> Hi there,
>>
>> Client of mine is the sole shareholder of a C-Corp and did not file
>> returns for the past ten years. In seven of those years, the C-Corp
>> has posted a loss. In the other three years, loss carry-forwards are
>> sufficient to zero out the profits. So net income was always zero and
>> tax due was always zero.
>>
>> I looked in the instructions for the Form 1120 for the various years,
>> and it appears that if a corporate return is more than 60 days late
>> and the taxpayer owes no tax, there is a fixed penalty, which is $100
>> for the earlier years and then $135 for the later years.
>>
>> My question is, does the IRS charge interest on this unpaid penalty?
>> The instructions don't indicate anything about this and the IRS
>> website is no help.
>>
>> Thanks,
>>
>> Chris Johnson, EA
>>
>
> The way I remember it, and what I'm reading in the 2012 1120
> instructions is, "The minimum penalty for a return that is over 60 days
> late is the smaller of the tax due or $135." Zero tax due is smaller
> than $135, thus the failure to file penalty will be zero.
>
different answer if it was an S Corp.
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