Q: I'm having problems with a federal tax return penalty.
I'm having problems with a federal tax return penalty. I registered an S corporation in Oct 2013 and lost track of it because I was working overseas. I never used the S corporation to conduct any business and I did not realize I needed to file any tax returns for it, as I thought it was inactive. Later in Oct 2016, I received a notice from CA state asking me to file a tax return for the S corporation and I realized it was still active. I immediately filed a business tax return and marked it final to dissolve the business.
Now the IRS is penalizing me for not filing my S corporation tax return on time.They want to charge me $195 for each month I did not file, and because I did not realize the company existed, the penalty added up to a huge amount. I believe the IRS should not penalize me for such a large amount because they should have notified me earlier about the late tax return penalty instead of waiting 4 years and letting it accumulate without my knowledge.
Please help!
A: Unfortunately, the problem was caused by your filing the delinquent tax return without talking to a tax professional. The penalty must be imposed on the Corporation for late filing K-1s, and you are urged to consult a tax attorney and do not respond to the notices yourself. The information presented herein is for general purposes only. It is not intended to, and may not be construed as legal, tax or accounting advice. Neither is it intended for solicitation purposes. For specific advice, please consult an appropriate attorney in person. Good luck. Zaher Fallahi, Tax Attorney, CPA.
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