ILLMAS Posted Monday at 06:19 PM Report Share Posted Monday at 06:19 PM New client has not filed since 2016 (business and personal), what are the chances the IRS will accept a super late S-Corp election? FYI there is reasonable cause, but I am afraid it's been too many years. Thanks Quote Link to comment Share on other sites More sharing options...
Lion EA Posted Tuesday at 03:59 AM Report Share Posted Tuesday at 03:59 AM Has it been operating as an S-corporation since 2016? Payroll? Forms W-9? Did everything except file the election? Thought lawyer filed it? What? Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted Tuesday at 08:36 PM Author Report Share Posted Tuesday at 08:36 PM 16 hours ago, Lion EA said: Has it been operating as an S-corporation since 2016? No Payroll? No Forms W-9? They issued a W-9 and received a 1099 Did everything except file the election? Operated more like a sole proprietor Thought lawyer filed it? No, a buddy did the paperwork What? TP is okay filing as a disregarded entity since if it's too late, I more or less calculated the penalty for the K-1's and it will be probably more then the SE tax if the penalty is not waived. Quote Link to comment Share on other sites More sharing options...
Lion EA Posted Tuesday at 08:44 PM Report Share Posted Tuesday at 08:44 PM Not to mention the P&I on all those years' worth of late payroll forms, 841, 940, etc., and amending his personal returns to account for the new W-2s and K-1s. Your fee should be huge! They issued a W-9 stating what name, TID, and checked what biz structure? Quote Link to comment Share on other sites More sharing options...
Max W Posted Tuesday at 09:27 PM Report Share Posted Tuesday at 09:27 PM Usually, the IRS will only allow a late year S-corp election to go back two years. 1 Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted Wednesday at 03:36 PM Author Report Share Posted Wednesday at 03:36 PM Business has no books, business bank account is intermingled with personal expenses and I can go on and on and no personal tax return has been filed for over 5 years. Would you recommend just making the election for 2021 and reporting prior years on Sch C? Quote Link to comment Share on other sites More sharing options...
Lion EA Posted Wednesday at 03:49 PM Report Share Posted Wednesday at 03:49 PM It sounds more like a hobby than a business. Why would you want to draw attention to it by filing an S-election now, hoping to make it retroactive? Why does the company want to be an S-corporation? It's going to cost them a bundle to have you do their past bookkeeping, payroll, financial statements, personal returns, etc. I hope you have a huge retainer. Can they afford you? Can they afford all the P&I? If they came to me and insisted on a much-too-late S-election, I'd send them elsewhere! If they came to me to make a fresh start, I'd work with them to treat their casual hobby/business like a real business. I would not rewrite their history. Depending on their income and long-term plans (do they want to take in a new shareholder, for instance?) I might suggest an S-election for 2023, after I've seen them make the changes I'd require. If you have time to redo 2022, you might make a late election for 2022. 4 Quote Link to comment Share on other sites More sharing options...
DANRVAN Posted Wednesday at 10:06 PM Report Share Posted Wednesday at 10:06 PM 6 hours ago, ILLMAS said: Business has no books, business bank account is intermingled with personal expenses and I can go on and on and no personal tax return has been filed for over 5 years. Would you recommend just making the election for 2021 and reporting prior years on Sch C? I agree with Lion. You have no idea if this taxpayer would benefit from becoming an S-Corp. Most likely not if business and personal account is intermingled. 4 Quote Link to comment Share on other sites More sharing options...
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