I had started an S-Corporation in Jan 2007. However, I did not use the corporation or had any business activity for 3 years. In 2010, I started activity, had sales, and paid 1 contractor (1099).

I am now getting ready to file 2010 taxes. I want to know what to do for 2007, 2008, and 2009 tax returns as I did not have any activity nor filed taxes in those years. Do I need to go back and file? If yes, how / what forms? Will there be any penalties?

Will this raise a flag with IRS that I incorporated in 2007 and 2010 is the first year I am filing taxes? Or should I just change the date of incorporation to 2010 (even though it was really 2007)?