C-Corp returns with zero taxable income not filed for ten years, will there be interest on the late filing penalties?

and what are the chances of begging off the penalties in this situation?

"caj11" wrote

I don't believe they would charge interest, or at least the interest clock doesn't start, till the penalty is assessed and billed. So the initial notice would have the penalty assessed, plus interest from the assessment date. This is different than a tax due notice because the taxes were due on some earlier date and interest would apply from that date.

Expect there to be similar penalties for unfiled state returns.

for the past ten years. In seven of those years, the C-Corp has posted a loss. In the other three years, loss carry-forwards are sufficient to zero out the profits. So net income was always zero and tax due was always zero.

appears that if a corporate return is more than 60 days late and the taxpayer owes no tax, there is a fixed penalty, which is $100 for the earlier years and then $135 for the later years.

instructions don't indicate anything about this and the IRS website is no help.

The way I remember it, and what I'm reading in the 2012 1120 instructions is, "The minimum penalty for a return that is over 60 days late is the smaller of the tax due or $135." Zero tax due is smaller than $135, thus the failure to file penalty will be zero.

Slim to none. He should have been filing returns, he is the only shareholder so he can't blame it on anyone else, and never employed any bookkeeper or tax professional. He only has his own ignorance to blame and I don't think the IRS will go for that.

Thanks for the answer. As for the state returns, the corporation is in a state where a minimum tax applies whether you made any money or not, and he is paid up on that, although penalties may still apply.

Failure to File Penalty under IRC 6651(a)(1) accrues interest from the due date or extended due date of the return.

I agree. No tax due means no penalty. You would get a completely different answer if it was an S Corp.