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  • Carlos Fraser, E.A.

Filing delays & IRS Penalties for 2018 and beyond...

The 2018 tax season has over 100 filing deadlines for personal, Business, Estate, Payroll and Non-Profits. We would like to focus on two main tax laws that took effect in 2017 for 2018 and beyond.

2017 Tax credit Filing delay and business penalties

1. Filing Delays for Personal:

We imagine you worked hard earning money to support your family last year and the tax season is finally here to give you that needed additional income.

However,you find out someone has already claimed you, your spouse, or one of your dependents! And to make matters worse the IRS must do an investigation that requires you to re-file your return via mail; then wait a minimum of 90 days to accept your return!

That was reality for many taxpayers since 2016. The IRS has changed the tax law for 2017 stating they will not issue refunds on tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) before mid-February. Under the change, the IRS must hold the entire refund – even the portion not associated with the EITC and ACTC.

This law change, helps ensure that all taxpayers get the refund they are owed by allowing the IRS more time to detect and prevent fraud.

2. Certain businesses have to be mindful of the penalties for filing late:

The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 changed the due date by which a partnership (including multi member LLCs) and S-Corporations must file their annual return.

For calendar year entities described above, the due date for filing annual returns or request an extension has changed from April 15 to March 15. ( Regardless of April 15th defaulting to a later date due to weekend or holidays)

The late filing penalty is $195 per partner per month (up to 12 months). The IRS defines a month as “any part of a month.” So if you file on the 1st day of the month, you would still be subject to the $195 penalty.


Example # 1: If you file a partnership return with two members and you fail to file on March 15, without an extension but you file on April 1st your penalty would be $780. { 2 months x 2 members x $195}

Example # 2: If you file a S-Corporation return with one member and you fail to file on March 15, without an extension but you file on April 1st your penalty would be $390. { 2 months x 1 member x $195}

As you can see for certain individuals, filing delays can affect your cash flow so do not allocate, promise, or plan purchases until you receive the money in your account or as a check.

For the applicable business owners, if you do not have your books and records together by February, request an extension to avoid the penalty, because penalties are not tax deductible.

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