Penalties for Late Filing of Sub S Corporation and Partnership Tax Returns

The due date for the 2016 tax returns is 9/15/17. If you are late then the penalty is $195 per month per owner for up to 12 months. With only two shareholders or partners the maximum penalty would be $4,680 so it can really add up. The IRS added this stiff penalty several years ago to encourage speedy filing of pass through entity returns since they didn't want them to hold up the processing of regular 1040 tax returns. The penalty is assessed on the Sub S or partnership instead of the individual owner.