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Tax News
Heads-Up – Changes in Pass-through Entity Return Penalties

Recently signed legislation, SB 401, changed the partnership late filing penalty1 and added a new late filing penalty for S corporation returns.

We assess the late filing penalty if a partnership or LLC, treated as a partnership, files a late or incomplete return. The late filing penalty is currently $10 per partner, for each month or fraction of the month the return is late or incomplete, to a maximum of five months. Beginning with returns required to be filed after January 1, 2011, the penalty will increase to $18 per partner for a maximum of 12 months.

Currently S corporations are subject to the delinquent penalty2. Beginning with returns required to be filed after January 1, 2011, we will assess the new late filing penalty3 in addition to the delinquent penalty. The new late filing penalty is $18 per shareholder, for each month or fraction of the month the return is late or incomplete, for a maximum of 12 months.

We can waive both late filing penalties for reasonable cause.

1 R&TC Section 19131
2 R&TC Section 19172.5
3 R&TC Section 19172

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