Tax Filing Requirements for Corporations and LLCs
An LLC that is taxed as a partnership and an inactive corporation have different federal income tax return filing requirements. While an LLC with no business activity may choose not to file a partnership tax return unless claiming expenses or credits, a corporation must always file. This includes those taxed as an S corporation, which use Form 1120S. It is important to file the initial Form 1120S by the deadline to avoid any IRS penalty charges.
Zero Returns and Deadlines
Corporations are to submit a "zero return" using IRS Form 1120 if there has been no business activity. Instructions for Form 1120 apply to both profitable companies and those without transactions. Filing an initial tax return is critical to prevent IRS estimated billing. For an extension, corporations can file Form 7004 by the original deadline.
The annual tax return for a corporate taxpayer must be filed by the 15th day of the fourth month following the close of its tax year. The deadline for submitting corporate tax returns for income from the prior year is usually April 15.
Penalties and Compliance
The penalty for not filing a federal S corporation tax return on Form 1120S, or for providing incomplete information, is $195 per shareholder per month for up to 12 months. Filing is necessary even with no income to prevent IRS penalties and arbitrary assessment notices. Failing to file a Form 1120 by the deadline results in a monthly penalty equal to 5 percent of any unpaid income tax.
Required Tax Forms
- S corporations report income, losses, and deductions using Form 1120-S.
- Regular corporations use IRS Form 1120 for their income tax return.