We're a 2 person shareholder/employee team making around 45K Gross Adjusted Annual Income. Completely goofed on the quarterly 941's though- thought we would pay it all at tax day- so what do we do now? I see we'll have terrible penalty fees for all the months of missing the 941 deadlines. Is it possible to revert S-Corp election after the fact?
IRC §1362(d)(1) indicates that revocation of the S corporation election such that the company would never be treated as an S corporation would have to have been made by the 15th day of the third month of the S corporation's tax year, otherwise the revocation will be effective at the beginning of the following tax year. Since you have missed deadlines for filing Forms 941, you are apparently beyond the 15th day of the third month of the S corporation's tax year, so the company must remain an S corporation for the current tax year.
You might be eligible for first-time penalty abatement:
IRC §1362(d)(1) indicates that revocation of the S corporation election such that the company would never be treated as an S corporation would have to have been made by the 15th day of the third month of the S corporation's tax year, otherwise the revocation will be effective at the beginning of the following tax year. Since you have missed deadlines for filing Forms 941, you are apparently beyond the 15th day of the third month of the S corporation's tax year, so the company must remain an S corporation for the current tax year.
You might be eligible for first-time penalty abatement:
In other words, file then now, and immediately go to a tax professional to make sure you are missing something else that is required. Doing things wrong can easily cost you thousands of dollars.
In your other question it appears that you have indicated that you have not yet paid yourselves any wages. If that's the case, I don't know if you would actually be considered late with Forms 941 or not. The instructions for Form 941 indicate that your initial Form 941 is due for the quarter in which you first paid wages that are subject to Social Security and Medicare taxes or subject to federal income tax withholding, and with no wages paid there would have been no such withholding. I don't know how the fact that you *should* have been paying yourselves wages factors in.
If I am late sending form 941, can I still file it and send the payment?