Fines and penalties for late filing are getting ineresting
Just got off phone with my credit card company about a questionable bank fee. The lady manager was tougher than usual and my guard was up. I was surprised that getting waiver on such a small fee would take a little war with a manager level employee. That used to be a job for a regular customer service agent.
Well, I shouldn’t be surprise because in such a tough time, companies take the wisdom of “sweat any little thing”. Our government in all levels are taking the same approach too. Charging fines and penalties has become a great performing industry. Just in San Francisco, the parking fines bring in estimated $103 million to the city in 2009. Here is a “shopping catalog” for your curiosity. It was said that the “hot product” is the $60 ticket for parking meter violation. (San Francisco Story)
Seriously, there are many such traps that will cost you a small fortune when it comes to government filing. Let me outline some of those common ones if you are doing business in San Francisco, California.
Business Registration Renewal
This is the fee for doing business in San Francisco. Renewal is required annually. If you do not renew it on time, even thought you don’t owe any business tax, you will be charged for late filing a right out $250; if you also have tax to pay, additional late payment penalty could be as high as your tax amount. (Check out the detail here)
Statement of Information
California Secretary of State requires an annual filing to update information such as names and addresses for the officers for a corporation (or s-corporation, non-profit), or managers for a LLC. It is a one-pager form and a $25 fee. If you file it late, the penalty is $250. (Check out other SOS filings here)
Minimum Franchise Tax
California is very aggressively enforcing the minimum franchise tax. It does not matter if you have zero taxable income or your company isn’t incorporated in California, and as long as you are doing business here in the golden state, your will pay a minimum $800 franchise tax. It should be paid in advance by the 4th month of each new year. This applies to corporation, s-corporation, and LLC. Many people confuse that with the annual income tax filing. You will get a notice with penalty promptly.
This one comes with killer formula
For late filing of Form 1120-S, tax return for s-corporation, the fine is calculated by multiplying $89 by the number of shareholders, and then by the number of months being late. For late filing of Form 1065, return for LLC or partnership, the fine is calculated the same way, except the dollar amount is $90. If you can not file these forms by the due date for any reason, for goodness’ sake, please make sure you submit an extension application. (IRS explanation) If you happen to get a notice from IRS about this, here are some advice for getting abatement.
(Update: This penalty is increased to $195 per shareholder/partner for s-corp or partnership returns filed after in 2010.)
Last but not the least
If you fail to file an information return to report your foreign financial accounts, aka offshore accounts, here comes the lethal weapon: up to $500,000 fine and up to 5 years in prison. This is very extreme, but for sure they can fine you a minimum $10,000 no matter what. (Check it out yourself)