1120-S Penalty for Filing Late - How to Get a Reduction?
So I royally screwed up this year and submitted my 1120-S on regular tax day (April 15), completely forgetting that S-Corps have that earlier March 15 deadline. This is only my third year with an S-Corp and I could have sworn I remembered the deadlines correctly (I did file on time the previous two years). I just got hit with a notice from the IRS saying I owe a penalty of around $560 for being two months late, although by my calculation it was really just one month and a few days late. I fully admit I messed up and had no legitimate excuse - just plain forgot the deadline was different. Has anyone successfully gotten these kinds of penalties reduced? I'm not trying to get out of paying completely since I know I was late, but the amount seems pretty steep for a small business like mine. I'm wondering if writing a letter explaining it's my first time missing the deadline might help? Or is it better to just pay it and move on?
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Noah huntAce420
You might be able to get this reduced or eliminated through what's called "First-Time Penalty Abatement." Since you've had a good compliance history (filing and paying on time) for the past couple years, you're likely eligible. The IRS is surprisingly reasonable about this for first offenses. Call the IRS using the number on your notice and specifically ask for "First-Time Penalty Abatement" for your late 1120-S. Explain that you've been compliant in previous years and that this was an honest mistake about the filing date. Be polite but persistent if needed. The key is that you've had a clean record for the past 3 years, which it sounds like you do. This isn't guaranteed, but many business owners have success with this approach for one-time mistakes.
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Dananyl Lear
•That's really helpful - I had no idea First-Time Penalty Abatement was even a thing! Do I need to prepare any specific documentation before I call, or just have my notice handy?
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Noah huntAce420
•Just have your notice handy along with your EIN and business info for verification purposes. No special documentation needed beyond that. I'd recommend calling earlier in the day when wait times tend to be shorter. The conversation should be pretty straightforward since this is exactly what First-Time Penalty Abatement was designed for - good taxpayers who made a one-time mistake. Make notes during your call including the name of the representative you speak with and any confirmation number they provide if your request is approved. If for some reason the first person you talk to isn't helpful, politely thank them, hang up, and try calling again to speak with someone else.
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Ana Rusula
I went through something similar last year with my 1120-S and found out the hard way that dealing with the IRS directly can be super frustrating. After multiple failed attempts to call (endless holds and disconnections), I stumbled on this service called taxr.ai (https://taxr.ai) that helped me prepare a proper penalty abatement request. What I liked is that they analyzed my specific situation and created a personalized letter with the right legal language about reasonable cause and First-Time Abatement. They also explained exactly what supporting documents I needed to include. The whole process was way less stressful than trying to figure it out myself, and my $670 penalty ended up being completely waived!
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Fidel Carson
•Does this work for other penalties too? I got hit with a late payment penalty on my personal taxes this year because of some confusion with estimated payments.
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Isaiah Sanders
•I'm a bit skeptical about these services. How much did they charge you compared to the penalty? Sometimes I wonder if it's just easier to pay the penalty than to go through the hassle.
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Ana Rusula
•Yes, it works for various tax penalties including personal tax penalties, not just business ones. They handle everything from filing late penalties to estimated tax penalties and even payroll tax penalties. They have specific templates and arguments for each type. The cost was significantly less than my penalty amount, which made it an easy decision. In my opinion, the peace of mind was worth it since I was nervous about handling it myself. You submit your notice, they review your situation, and they tell you the likelihood of success before you even decide to proceed. I found the clarity really helpful when I was stressing about the whole thing.
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Fidel Carson
Just wanted to follow up here - I ended up trying taxr.ai after seeing this recommendation. My situation was different (personal taxes rather than business), but the process was super straightforward. They analyzed my penalty notice, determined I was eligible for abatement, and prepared a letter with all the right terminology and IRS references. The best part was they explained everything so I actually understood what was happening instead of just blindly following steps. My penalty was completely removed! The whole thing took about 10 days from submission to receiving the confirmation from the IRS. Definitely recommend for anyone facing penalties.
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Xan Dae
If you decide to call the IRS directly instead, good luck actually reaching someone. I spent WEEKS trying to get through about my own penalty issue. Would call at 7am when they opened, wait on hold for 2+ hours, then either get disconnected or told to call back another day because they were too busy. I finally used Claimyr (https://claimyr.com) after seeing someone recommend it on another thread. They have this system that basically waits on hold for you and calls you when an actual human at the IRS picks up. You can see how it works here: https://youtu.be/_kiP6q8DX5c. Totally changed the game for me - went from weeks of frustration to having my issue resolved in a single day.
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Fiona Gallagher
•Wait, this actually works? How does it even connect you to the IRS call when someone answers? Sounds too good to be true honestly.
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Thais Soares
•I don't understand how this is even legal. Like, aren't there rules about robo-calling the IRS or something? I've been trying to reach someone at the IRS for a month about my refund.
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Xan Dae
•It's not a robocall system - they use a legitimate call service that places you in the IRS queue just like you would do yourself. The difference is their system waits on hold instead of you having to sit there listening to the hold music. When an IRS agent picks up, their system immediately connects them to your phone. You're still the one talking directly to the IRS. It's completely legal and they're very transparent about how it works. They're just solving the problem of ridiculous hold times. It's especially helpful if you're trying to run a business and can't sit on hold for 3+ hours in the middle of your workday. Think of it like having an assistant wait on hold for you.
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Thais Soares
I was really skeptical about using Claimyr (from COMMENT 4) but I was desperate after trying for weeks to contact the IRS about my missing refund. I finally gave in and tried it yesterday. Holy crap, it actually works! I got a call back in about 75 minutes (after previously spending hours on hold myself multiple times). The IRS agent was able to resolve my issue in about 15 minutes once I explained the situation. I literally spent more time trying to reach the IRS over the past month than it took to solve my actual problem. Would have saved myself so much frustration if I'd just used this service from the beginning. Definitely recommend if you need to actually talk to someone at the IRS!
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Nalani Liu
Just wanted to add that if you go the First-Time Penalty Abatement route, make sure you specifically use that terminology. I made the mistake of just asking generally about "reducing my penalty" and the agent initially told me nothing could be done. When I specifically mentioned "First-Time Penalty Abatement" (after doing more research), suddenly they were able to help. It's like they won't offer it unless you specifically ask for it by name. My 1120-S penalty was completely removed within a few weeks.
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Dananyl Lear
•That's a great tip! Did you have to submit anything in writing or was it all handled during the phone call?
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Nalani Liu
•In my case, it was all handled during the phone call. The agent asked me a few questions to verify my eligibility (basically confirming I hadn't had penalties in the prior 3 years), then processed it right there. I received a formal letter about 3 weeks later confirming the abatement. Some agents might tell you to submit Form 843 (Claim for Refund and Request for Abatement), but in my experience and from what I've heard from others, it's often not necessary for straightforward first-time penalty cases. The phone call alone usually does the trick if you're clearly eligible.
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Axel Bourke
Anyone else notice how the IRS says your 1120-S was "two months late" when it was actually one month and a few days? They count partial months as full months for penalty calculations. So even if you're just ONE DAY late into a new month, they charge you for that entire month. Totally frustrating but that's how they calculate it.
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Aidan Percy
•Yep, this is exactly why I always file at least 5 days before any deadline now. I learned this lesson the hard way too. Even a day late and they count it as a whole extra month for penalty purposes.
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Grant Vikers
I just went through this exact same situation last month! Filed my 1120-S on April 15th thinking I was on time, then got slapped with a $480 penalty notice. The March 15th deadline for S-Corps really catches people off guard. I called the IRS and asked specifically for "First-Time Penalty Abatement" (as others mentioned, you HAVE to use those exact words). The agent reviewed my filing history, confirmed I'd been compliant for the past 3 years, and approved the abatement on the spot. No forms to fill out, no documentation needed beyond my EIN and the penalty notice number. The whole call took about 25 minutes including hold time, and I got the confirmation letter 2 weeks later showing $0 balance. Definitely worth making the call before just paying it - the IRS is surprisingly reasonable about genuine first-time mistakes when you have a clean compliance history.
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Carmen Lopez
•This is really encouraging to hear! I'm in almost the exact same boat - filed on April 15th thinking I was good to go, then got hit with the reality check about S-Corp deadlines. Your experience gives me hope that calling might actually work. Did you have to explain why you were late, or did they just focus on verifying your clean compliance history? I'm worried they'll ask for a detailed explanation and I don't have much beyond "I genuinely forgot the deadline was different.
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