New Penalties This Year For Late Returns

This post is in: Business


If you’ve got a partnership or S Corporation return and haven’t yet filed your return for 2009, pay attention to today’s blog!

These returns are due 9/15, not 10/15 as some have been in the past.

Here’s how it works:

If you have a corporation with a 12/31/09 year end, your return will be due 3/15, or 2 ½ months after the year-end. You can file a Form 7004 and request an extension for 6 months, which takes you until 9/15/10.

If you have an LLC with multiple partners that has been disregarded for income tax purposes, a partnership or a joint venture, then your 12/31/09 tax return was due 4/15. You hopefully filed a Form 7004 which gave you an extension for 5 months. That takes you until 9/15/10 as well.

If you’re late, or failed to file the extension, there are some newly increased penalties that you’ll get hit with.

For the S Corporation, it’s $195/month for each month or partial month and per shareholder. So, if you’re late one month and there are two shareholders, it will be $390.

For the partnership, it’s $89/month for each month or partial month and per shareholder. So, if you’re late one month and have 10 partners, it will be $890.

If you’ve missed filing for a number of years, now is the time to come clean. Otherwise, the IRS may file a substitute return for you, disallowing deductions and then start the lien process against your assets. This is DEFINITELY something you want to avoid! Get a good CPA or tax attorney working with you right away. Give Richard a call at 866.829.2368 extension 1 to see how we can help.


  1. Carolyn,

    Yes, California charges you an $800 Franchise Tax. The LLC is generally used for real estate investing for asset protection. You can wait to form an LLC until you get property. But we do recommend you hold your property in some type of asset protection structure.

  2. J dancer,

    On the flow through entities – S Corp & partnership – there wouldn’t be tax due because the income or loss flows through to the individual. But the penalties apply no matter what.

  3. Carolyn says:

    I want to do some real estate investing and have been learning about it and done a few deals. I was advised to have an LLC. Now I am learning that I must file w/ the Franchise Tax board and pay $800 Calif tax when I have not even earned any $ yet! I don’t want to pay social security taxes on my real estate investing, but need the asset protection. Can you clarify this situation for me? Thank you very much. Carolyn W

  4. J dancer says:

    Does the IRS non-timely filing penalty apply if no tax is due?

  5. Diane Kennedy says:

    It’s just starting this year (ie… 2009 returns). I think there are two reason: (1) the government needs money and (2) they figure that if it’s a flow through entity there could be partners/shareholders waiting for K-1s.

    If it’s just your return, that’s not so much an issue, but if you’re holding up a partnership return and others don’t get their K-1s, that’s a problem.

  6. Andrea T. says:

    This is brutal…just for 2009 returns or is this retroactive? How can they do this when these flow through to a personal return? ARGH!

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