Late filing penalty for S corp with no assets


#1

Please consider the following:

1 - S corp filed timely for 2011 and 2013. IRS claims non-receipt. Corp has no supporting documentation proving that it filed on time.

2 - In 2016, Corp filed late and without an extension. Corp filed an abatement letter with the IRS claiming a health issue. IRS focused on the surgery date instead of the illness onset date and rejected the abatement request. IRS also notified Corp for the first time that they claim non receipt of 2011 and 2013 returns

3 - Corporation has not had assets since 2014, and has been inactive since that time. The only transactions of the corporation in 2015, 16 were payments of taxes. No asset transfer occurred between the corporation and its sole shareholder when the company ceased operations. The company has been in a deficit position.

I am inclined to just let the IRS come after the non-existent assets of the corporation. Please share your thoughts.


#2

David,
You are spot on (“inclined to just let the IRS come after…”). However, I would suggest you request Currently Not Collectible, based upon IRM 5.16.1.2.6:
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I’m sure you will get several other recommendations from the group, but this should be pretty quick and easy (if there is such a thing with the IRS). As long as the client does not “activate” or conduct business in the future (under the EIN), the CSED will run it’s course (over a 10 year period) and just go away.

Hope this helps,
Jeff