A penalty per owner, per month
Partnerships (Form 1065) and S corporations (Form 1120-S) usually pay no federal income tax themselves, because the income passes through to the owners. So a late return can seem harmless. It isn't.
It applies even when no tax is owed. A three-partner LLC that files its 1065 five months late owes 5 × $255 × 3 = $3,825. A ten-partner firm that misses a full year owes 12 × $255 × 10 = $30,600. For the full background, read the S corp and partnership guide.
The amount for each year
The per-owner amount depends on the calendar year the return was due. A late 2023 partnership return, due in March 2024, uses the 2024 amount. Partnerships and S corporations use the same amounts.
| Return due | Per owner, monthly |
|---|---|
| 2026 | $255 |
| 2025 | $245 |
| 2024 | $235 |
| 2023 | $220 |
| 2021–2022 | $210 |
| 2020 | $205 |
| 2018–2019 | $200 |
March, not April
Calendar-year Forms 1065 and 1120-S are due March 15, or the next business day if that falls on a weekend. For 2025 returns, the due date was March 16, 2026. That's a month before the individual deadline.
Form 7004 gives you six more months, but it only helps if you file by the new date. For 2025 returns, that's September 15, 2026. File after that and the penalty counts months from the extended deadline. Other years are in the deadline tables.
Using the calculator
The calculator starts on Partnership. For an S corporation, switch to S corporation at the top. Then enter the number of partners or shareholders and the date the return was filed. Count everyone who was an owner at any time during the year, even for part of it. Most of these returns owe no entity-level tax, so leave that amount at $0 unless the return itself had unpaid tax.
Three ways to get it removed
- First-time abatement. If the business filed and paid on time for the prior three years, the IRS's First Time Abate waiver can apply, and it's often granted with one phone call. See the first-time abatement guide.
- Rev. Proc. 84-35. A domestic partnership with 10 or fewer partners, all individuals or estates, with equal allocations, whose partners reported their shares on timely personal returns, is presumed to have reasonable cause.
- Reasonable cause. Serious illness, disaster, destroyed records, or reliance on bad professional advice. You'll need documentation.
Questions people ask
Is there a penalty if the business owes no tax?
Yes. The penalty is per owner, per month, whether or not any tax is due. That's what sets it apart from the individual late-filing penalty.
How long can the penalty keep growing?
Up to 12 months. Any part of a month counts as a full month, so filing one day late costs a full month's penalty.
Do partners who joined or left during the year count?
Yes. The IRS counts anyone who was a partner or shareholder at any time during the year.
Does interest build on this penalty?
Not from the return's due date. Interest on these per-owner penalties starts only after the IRS sends notice and demand.