QUESTION: Regarding the late filings of Proforma 1120 and 5472, are you suggesting that you’ve previously submitted some returns that were three months or more late, and no penalties were enforced by the IRS? Please correct me if I’m wrong, but are penalties only applied if the IRS decides to enforce them?
EXPERTS ANSWER:
Yes, you are correct in your understanding. The IRS has established a penalty of up to $25,000 for various filing failures, including filing returns inaccurately or late, or not filing at all. However, enforcement of these penalties can vary significantly depending on several factors:
- Filing Inaccuracies or Late Submissions: There is a possibility to argue for reasonable cause in these scenarios. If there is clear evidence that an effort was made to comply with the regulations, despite the delays, the IRS might take these circumstances into account before deciding on the imposition of penalties. Demonstrating proactive steps towards compliance can often mitigate potential penalties.
- Failure to File: This situation is considerably more severe and comes with higher risks. Not filing at all directly violates IRS regulations and is likely to result in substantial penalties if discovered. As a licensed professional, I strongly advise against neglecting to file, as it jeopardizes compliance with established tax laws.
Despite my experience with late filings since 2017 where my clients have not faced penalties, it’s important to recognize that each case is assessed individually by the IRS. The absence of penalties in past instances does not guarantee a similar outcome in future cases.
Further Guidance:
For those needing personalized advice or who have specific questions regarding their situation, I encourage you to take advantage of a detailed consultation. We can discuss the intricacies of your tax obligations and explore potential strategies to ensure compliance and minimize risks.
Schedule a consultation with O&G Tax and Accounting Services to receive tailored advice and support.
