shutting down a corporation retroactively?

[Skate1968]

Hi folks,

I know this is a longshot. and probably just wishful thinking on my part. but here goes:

I ran in to this older semi retired gentleman. A real good guy.

He accountant has NOT filed his 1120S return for 2012.

He already used up his "one time only" waiver of late penalty for 1120S in a prior year.

The corporation is just himself with roughly 25K in income. He pays a salary to himself. rents half of hi duplex to himself.

941s and w2s are all current.

would it be feasable to amend his 2011 1120S and make it final? retroactively closing the corp in 2011?

the IRS practitioners hotline says no. they say that i can NOT do that. But i thought that i'd ask here first before giving up.

thanks for reading.

[TaxGuyBill]

Maybe I'm misunderstanding, but it seems like you are saying that the corporation WAS in business in 2012, and had 941's and W-2's filed (with the corporation's EIN). You can't close a corporation that continues to do business.


You did say "He accountant has NOT filed his 1120S return for 2012." Is it the accountant's fault? Did the taxpayer think it was filed? If you can prove that, you probably could still get a penalty waiver. Also, from what I've heard, it's not necessarily a "one-time" penalty waiver. On of my CPE classes mentioned you can usually use it once every 5 years. However, I do not know that for a fact, that is just what I've 'heard'.

[Skate1968]

thanks for responding, TaxGuyBill.

"Maybe I'm misunderstanding, but it seems like you are saying that the corporation WAS in business in 2012, and had 941's and W-2's filed (with the corporation's EIN). You can't close a corporation that continues to do business."

Thanks, that's what i was afraid of. I will convert him from an s corp to a schedule C -- a sole proprietor. but i was hoping to do it sooner rather than later to avoid penalties.

yes, the taxpayer did indeed believe that all returns were being filed. And we'll continue to ask for leniency on penalties.

It is totally the accountant's fault. I don't know that we can prove exactly when the client provided his preparer with detailed accurate records on quickbook files.

But the merefact that he kept all his records on quickbooks and NOT paper should be telling by itself. why on earth would he NOT provide them on a timely bases?

Any additional advice on this would be appreciated.

[TaxGuyBill]

The tricky thing with blaming the accountant is that it's NOT all his fault. It seems like the taxpayer did not receive a copy of the tax return and did not sign either the tax return or the e-file authorization form. That makes the taxpayer partly to blame.

When pleading the leniency for the penalty, try to use such words and phrases as the taxpayer 'misunderstood', 'believed' or 'thought the accountant filed'. I would avoid the word "assumed".