S Corp Non Filing Penalty

[erchess]

Don't you love it when people form corps that have no revenue? Client did this and did not file for one or more years because was unaware of requirement to file with no revenue. Now as we all could have predicted the IRS and SC are asking for penalties as well as the returns. Client is insolvent at this time.

Am I right in thinking that the taxpayer can avoid payment of the penalties by dissolving the S Corp? If she goes this route what are the consequences beyond the fact that she can't be a significant owner of a corp or partnership in the future without paying what is owed plus p and i?

Any other options for her?

Anyone with experience in SC who wants this client?

[BOB W]

In most states, Dissolutionment means filing all returns and paying ALL assessments. Any liability to Federal and State is a Corporate level liability. When this happens, you just need to have the client do nothing. For many years to come they will get notices but eventually they will stop, or be very few.

Dissolution by Proclamation(?) will happen after many years by the state.

[erchess]

TY Bob

Does anyone have any knowledge of relevant specifics for SC? In NC you can dissolve a corp even while its taxes are in arrears.......or at least that's my understanding.

[jimmcg]

Does anyone have any knowledge of relevant specifics for SC? In NC you can dissolve a corp even while its taxes are in arrears.......or at least that's my understanding.

Check the SC Secretary of State website for specifics pertaining to corporate disolution and also for appropriate forms for accomplishing this.

[erchess]

Thank you Jim

I am going to do that today.

[erchess]

SC Dissolution

If you let a tax problem drag out to the point your corp is dissolved administratively, then you cannot get it reinstated without getting current with your state taxes. DOR will then give you a certificate and you can get your corp reinstated. That much makes sense to me.

However if all you want to do in that situation is file the form that dissolves your corp (iow you just want to say yes let's dissolve my corp) you still have to catch up on your taxes and get the certificate from the DOR. I don't know what happens if you are notified of administrative dissolution and you take no action. I do know that you can dissolve the corp without the certificate if you do so before things reach the point of administrative dissolution. That pattern strikes me as odd but whatever.

The one question i still have is what happens if you ignore the notice of administrative dissolution. If no one knows, I will call SC tomorrow. Either the DOR or the Sec of State will know the answer.

[BOB W]

[QUOTE=erchess;107200]
"I don't know what happens if you are notified of administrative dissolution and you take no action."

QUOTE]

Doing nothing is what you want to do...................All liabilities are the Corporation's liabilities.