LLC Non-Filing Penalty

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    Shawn Wright

    Hello, I have a new client who started an LLC in 2016 in order to renovate and flip real estate. They have not filed 1120 returns during this time, but they haven’t had any income either. Is there any way to have the IRS abate this non-filing penalty? Thanks, Shawn Wright


    Hi Shawn,

    I take it that your client has an LLC that’s registered as an S-Corp for tax purposes. If this is the case, then the client is required to file an 1120-S for each tax year s/he’s in business regardless of how much income is generated. If $0.00 in income was made, then the 1120-S should reflect that. S/he may also have a responsibility to file payroll tax returns and can be assessed a failure to file penalty as well.

    The IRS can issue a first time penalty abatement of the failure to file penalty on the first year but the penalties for all other years will stick unless your client had a valid reasonable cause for not filing the tax returns.

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