S corp filed late? Ask to remove the penalty

Your S corp's Form 1120-S went in late, and the IRS charged a penalty even though the company owes no tax. The S corp late filing penalty is $255 per shareholder per month for a return due in 2026, for up to 12 months. First-time removal covers it, and a tax pro can ask for the company.

• $255

  The charge is $255 per shareholder per month for a 2026 due date.

  two owners and three months late is already $1,530.

  count every person who was a shareholder that year.

• Refund window

  Already paid the penalty? The Form 843 instructions say you generally must claim within 3 years after filing the return or 2 years after paying, whichever is later.

  for example, a return filed and paid on June 16, 2026 has until June 16, 2029.

  check both dates before you call or mail the form.

• 12 months

  The penalty stops after 12 months.

  a three-owner S corp can reach $9,180.

  if the return is still unfiled, file it now to stop the count.

How it's figured

Dorothea and Callum own a two-person S corp. Their 2025 return was due March 16, 2026, and went in 3 months late. The penalty is $255 times 2 owners times 3 months, or $1,530.

The IRS failure to file page gives the formula. Take the base rate, times everyone who was a shareholder that year, times the months late. Part of a month counts as a full month.

The base rate goes by the return's original due date, not the date you file. A return due in 2025 uses $245.

First-time removal for businesses

S corporation late filing is one of the penalties on the IRS administrative relief list. The S corp needs the same return filed on time for the 3 years before, and no penalties in those years.

Businesses have two extra conditions. The IRS cannot have waived a late deposit penalty 4 or more times in those years, and no deposit penalty can be for skipping EFTPS. The first-time removal page has the phone script.

The letter

You can call the IRS at the number on the notice, or a licensed tax professional can make that call for the company. If you have to write, use Form 843 with line 6 set to section 6699, the S corp late filing rule. The Form 843 tool fills in the official IRS PDF that way when you pick "S corporation late filing".

An officer with authority signs, and writes the title beside the name.

Partnerships: Rev. Proc. 84-35

Partnerships have one more way out that S corps don't. A small partnership with 10 or fewer partners can be treated as having a good reason if every partner reported their share on time. The partnership page lists all four tests.

Payroll penalties are on the Form 941 page. For the general rules, see IRS penalty removal.