What penalties apply for late filing Form 1120-S for an LLC with S-corp election? Same as regular LLC or S-corp?

When you elect S-corporation status for your LLC, you're treated as an S-corporation for tax purposes, including penalties. So the penalty that applies would be under IRC-6699, which is $220 per shareholder for each month (or part of a month) that the return is late, up to a maximum of 12 months. Since you mentioned you have two shareholders, the penalty would be $440 per month ($220 × 2) for each month the return was late. For example, if you filed 3 months late, that would be $1,320 total ($440 × 3). The good news is that if you can show reasonable cause for filing late (not just willful neglect), you may be able to get the penalties abated. The IRS does consider legitimate reasons for late filing.

Last year I was in the same boat - filed my 1120-S about 45 days late for my LLC with S-corp election. I was freaking out about penalties too. I stumbled across this tool called taxr.ai (https://taxr.ai) which helped me understand exactly what penalties applied and gave me a template for requesting abatement. What I learned is that the S-corp penalties definitely apply since that's the tax treatment you elected. But what was super helpful was the tool analyzed my situation and helped me draft a letter explaining why I filed late (my tax documents were delayed from a major client). They have this feature where you can upload your notices and get specific advice.

I just wanted to update after using taxr.ai that someone mentioned above. It was actually really helpful! I uploaded my late filing situation details and it confirmed that since my LLC elected S-corp status, I was subject to the IRC-6699 penalty structure ($220 per shareholder per month). But the best part was that it helped me identify that I qualified for first-time penalty abatement since I had a clean compliance history for the past 3 years. I used their template to request abatement and the IRS actually approved it! Saved me about $1,320 in penalties. The whole process took less than 30 minutes on their site, and the IRS response came about 6 weeks later. Just thought I'd share since it actually worked for the exact situation being discussed here.

If you're dealing with penalties and need to talk directly to the IRS, good luck trying to get through on the phone. I spent DAYS trying to reach someone about my late 1120-S filing penalties. Then I found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in under 20 minutes. They have this system that navigates the IRS phone tree and waits on hold for you, then calls you when an agent is on the line. You can see how it works here: https://youtu.be/_kiP6q8DX5c For my LLC/S-corp situation, I needed specific clarification about the penalty calculation since I had added a shareholder mid-year. The agent I spoke with confirmed the IRC-6699 penalty structure applies and explained exactly how they count shareholders for penalty calculation purposes.

I need to eat my words about being skeptical. After trying for THREE DAYS to reach someone at the IRS about my late S-corp filing penalties, I broke down and tried Claimyr. Got connected to an IRS agent in 27 minutes. The agent confirmed what others have said here - when you elect S-corp status for an LLC, you're subject to the S-corp penalty structure under IRC-6699. In my case, I have 3 shareholders so was looking at $660/month in penalties for being 2 months late ($220 × 3 × 2 = $1,320). But here's the important part - the agent walked me through the reasonable cause abatement process over the phone and told me exactly what documentation to include with my letter. They said having proper documentation of circumstances beyond my control would give me a good chance of getting the penalties reduced or eliminated. Definitely worth it to actually talk to someone who could answer my specific questions instead of just guessing based on internet research.

Just to add a data point here - I had this exact situation last year. LLC with S-corp election, filed 1120-S about 75 days late. I can confirm 100% that the IRC-6699 S-corporation penalties applied, not the LLC penalties. I tried to argue with the IRS that since my business is "technically" an LLC, the LLC penalty structure should apply (which would have been less in my case). They shut that down immediately. Once you elect S-corp taxation, you're treated as an S-corp for ALL tax purposes, including penalties. The good news is I was able to get a partial abatement based on reasonable cause (I had documentation showing my accountant had a family emergency). They reduced my penalty by about 40%.

One thing nobody has mentioned yet - there's a difference between late FILING penalties (Form 1120-S) and late PAYMENT penalties. If you've been making your estimated tax payments as shareholders, you might only be dealing with the late filing penalty. The IRC-6699 penalty ($220 per shareholder per month) applies to late FILING of the 1120-S. But if you also have unpaid taxes at the shareholder level (on your 1040s), that's a separate penalty structure. Just something to keep in mind when calculating what you might owe.