I dissolved my Sub-S corporation on June 30, 2022. Stupidly, I assumed my corporate tax return was due by March 15, 2023. That was wrong. According to the 1120-S instructions "A corporation that has dissolved must generally file by the 15th day of the 3rd month after the date it dissolved."
So, I was due to file on September 15 and for a one-man S-corp whose net income was $20,000, the IRS is penalizing me $2,520. Seems outrageous to fine someone 12% of their income for filing late, especially since no money was owed and if I has just filed for dissoulution on December 31, I would have been fine.
My letter to the IRS includes these paragraphs. Any thoughts, comments or advice would be appreciated.
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I knew early in 2022 that I’d be closing this business and did not expect any income or expenses in the second half of the year, so I filed for dissolution with the state of New Hampshire on June 30, 2022. I now realize I should have filed those articles on December 31, 2022.
Given that all prior corporate tax returns were due by March 15 the following year, I mistakenly assumed that was the case. Intuitively, it didn’t make sense to file a 2022 return with 2021 forms. In addition, the instructions for Form 1120-S say, “A corporation that has dissolved must generally file by the 15th day of the 3rd month after the date it dissolved.” Note the word “generally”. The instructions do not say “must”.
Lastly, a penalty of $2,520 for a corporation whose net income was just over $20,000 seems excessive and onerous. Given that I didn’t owe any money to the IRS and my only mistake was to file on a date that seemed logical, I respectfully request you waive this fee.
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Two more questions:
- Is a letter better than a phone call? The letter includes a phone number and says to call.
- The letter is written to me as President of the corporation. Given the corporation no longer exists, has no assets and no bank account, am I required to pay this personally?
Thanks,
Bob in New Hampshire
