Hello TaxGuru,
I am in a big dillema here, and I hope you can direct me to the right place.

I had formed an S corp in 2004 and I have filed taxes that year.
The reason forming an S corp was because of my company required me to either make an S corp or be on their W2 with a much much less salary.
After one year I got a good offer at another company (on W2) and left the S corp alone. All I have done till right now (2008) is just paid the Annual Report Filing which was I belive $50.00 a year but did not file for tax nor paid tax. However, during these year I had absolutely NO INCOME coming in to the S corp and I have made few hundred dollars withdrawals from the S corp bank Account.

What is the best way to go about this corporation now ? What will be the best way to minimize my cost/fines? Is it worth for me to just dissolve it or leave it active? My main concern is what are the fines /penalties that IRS will charge if I were to just dissolve the S corp?

This S corp is filed in the state of New Jersey.

Thank you very much for your help.
awaiting for your suggestion/advise.
thanks
TaxRookie.

The corporation is inactive but you have not filed the tax returns due. Clearly, you are required to file a tax return or at least file an inactive NJ Tax return. Leaving it active simply means that you are incurring a minimum tax liability every year!

Please refer to the following article that discusses in depth the consequences of not dissolving a NJ Corporation.

What are the consequences of not dissolving a C Corporation in State of NJ?

There typically should not be substantial fines and penalties from the IRS as you have Zero income. Unfortunately, you will need to file an Inactive return for NJ state and pay the minimum NJ corporation tax along with interest and penalties that may be due!

I would "formally dissolve your corporation" and attempt to pay prior taxes due. This is the correct approach and I would request you to contact your CPA and have him or her prepare the dissolution paperwork for you.

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TaxGuru,
Thanks for the prompt response and advise. While I waited for the answer, I also contacted few CPAs, and they advised me to do the same. thanks much.
taxrookie.

You are welcome...I would suggest you promptly dissolve the corporation as soon as possible.