made mistake on filing 1065/late/wrong/penalty questions

[forosophia1]

I have two-member LLC founded on 10/1/19. I chose the accounting month to be Sept. (i thought it will be easier for me to remember...). But somehow I forgot all about this, and thought that we are using calendar year.

1) So, when it comes to 3/15/20, since we did not have any expense and income by 12/31/19, we did not file it based on following instruction:

"every domestic partnership must file Form 1065, unless it neither receives income nor incurs any expenditures treated as deductions or credits for federal income tax purposes."

2) We had some business activities during 2020; unfortunately we had loss. On 3/15/21, I filed 1065 for 1/1/20-12/31/20. 

I just realized today that we are using Sept as accounting month😫, so we suppose to file 1065 on 12/15/20. 

My Questions:

1) am I right? is it ok not to file 1065 if we neither received income nor incurs any expenditures treated as deductions or credits for federal income tax purposes

2) do I need to file 1065-X to correct the fillling period from (1/1/20-12/31/20) to (10/1/19-9/30/19)? The loss will not change much because we did not have much business activities during pandemic.

3) we are late on filing 1065. Will IRS consider the late period be 3 months (from 12/15/20-3/15/20) or will IRS consider late period to be longer (say after I filed 1065X), or after I paid off the penalties.

3) is there a chance to get first-time penalty abatement from IRS in our case? 

Thanks.

[Rick19744]

Multi-member LLC's taxed as a partnership are limited on what year end the entity can use.

The rules are as follows:

• The majority interest rule
• The principal partners rule
• Least aggregate deferral rule

All of these rules, without going into the technical details, look to the year end of the partners in determining the partnership's required year end.  Your required year end is most likely December.  An exception to this would be if you made a Section 444 election in which you can have at most a 3 month deferral.  However, there is a cost to this which is a deposit that is held by the IRS when the entity is profitable.

So in conclusion, based on your limited facts, I believe you filed a correct tax return since it is doubtful your required year end is September or you made a Section 444 election.

[forosophia1]

@Rick19744  Thank you very much for your reply. I did not think I should file 12/15/20 either. The reason why I know I am late is because in the initial IRS notice about my company's EIN number (Form SS-4), it says that 

"you must file the following form(s) by the date(s) shown"

"Form 1065 12/15/2020".

I am not exactly sure where this date come from.I do not think I filled Section 444. I thought that it may be because that we chose the closing month of the accounting year as "Sept" when we register the company in IL. 

[Rick19744]

Based on your facts:

• Unless you made a Section 444 election, your required year end is most likely December
• You need to fix the year end mistakes with both the IRS and IL
• I would not do anything with how you filed the current year form 1065 as I believe that is filed correctly.
• I recommend that you meet with a tax professional after April 15th and have them help you get this corrected as noted in circle 2 above.

[forosophia1]

@Rick19744 Thank you very much for your clarification!