| The IRS has increased the penalties for delinquent S corporation returns.
All S corporations that fail to file timely under IRC Sec. 6037 face an entity level penalty. The penalty is $89 per shareholder per month (for a maximum of12 months) for returns required to be filed after December 31, 2008, unless the corporation can show reasonable cause. But for delinquent tax returns filed after December 20, 2007 but prior to January 1, 2009, the penalty was $85 per shareholder per month.
If it is discovered in 2009 that a corporation has not filed for the last ten years, the penalty will apply to each return. It is based on when the late return is filed rather than the tax year for which it is due.
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