The partnership will receive a penalty on the partnership which lists the number of members and states the amount due per person.
You can request a penalty abatement. If everyone has been filing timely returns, you might get the penalty waived.
You will want to respond to the IRS letter with one of your own. The letter could go something like this:
To Whom It May Concern:
We are responding for the above-named taxpayer regarding the late filing penalties assessed under Code Section 6698(a)(1) per your notice (copy enclosed). We request automatic abatement of the penalties under Rev. Proc. 84-35 due to the facts below.
Your S Corp name here, state some facts here. Each member shares in each item of partnership income, deductions, and other pass-through items in the same percentage as their respective ownership percentages. The limited liability company had no tax liability at the entity level, and each member included all items of income, deductions and credits from the limited liability company on their own timely-filed income tax returns.
Sincerely,
name of person sending
Be sure to include the IRS form with the penalty. The IRS has an automatic freebie for many penalties the FIRST time. No guarantees though.
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