Did You Know There Are Filing Penalties for Partnerships and S-Corporations?

As a business owner, staying compliant with tax requirements is crucial to avoid unnecessary fines and penalties. One of the most common mistakes made by business owners is missing filing deadlines for partnership and S-corporation returns. Unfortunately, the IRS imposes significant penalties for late filings—penalties that can add up quickly and impact your bottom line.

Business Tax Returns Due Date - March 17th 2025

Filing Penalties for Partnerships and S-Corporations

1. Partnership Penalties (Form 1065):Partnerships are required to file Form 1065 each year to report income, deductions, and other key information. If you fail to file on time, the penalty is $245 per month per partner, for each month the return is late. This penalty begins accruing from the original due date and can quickly become quite costly if not addressed promptly.
2. S-Corporation Penalties (Form 1120S):S-corporations must file Form 1120S annually. If the form is not filed on time, the penalty is the same—$245 per month per shareholder for each month the return is late. This penalty can be even more burdensome for businesses with multiple shareholders, as it multiplies with each individual shareholder.

Why Timely Filing Is Crucial

Missing the filing deadline not only leads to hefty penalties but can also result in other complications for your business:

• Interest Charges: In addition to the penalty, the IRS charges interest on any unpaid tax liability, which accumulates daily until the tax is paid in full.
• Loss of Tax Benefits: Filing late could delay your ability to take advantage of certain tax benefits or credits. You may also risk triggering audits or other inquiries from the IRS.
• Business Growth Setbacks: A late filing can potentially affect your business’s reputation with investors, clients, or creditors, especially if financial matters are tied to compliance.

How to Avoid Penalties

1. File on Time: Mark your calendar with filing deadlines and ensure all necessary paperwork is completed in advance.
2. Extend the Deadline: If more time is needed, request an extension to file. But remember, an extension only extends the filing deadline—not the deadline for paying taxes owed.
3. Work With a Professional: A tax professional can help ensure that your returns are filed accurately and on time, reducing the risk of penalties and unnecessary stress.

Take Action Today

If your partnership or S-corporation has missed a filing deadline or you're worried about potential penalties, don’t wait until it’s too late. At Zenith Tax & Accounting, we specialize in helping businesses navigate tax compliance, reduce tax liabilities, and avoid penalties.

Contact us today for a consultation to ensure your tax filings are up to date and your business stays compliant.