Late Filing 1120 Penalties
For those of you just now starting to get failure to timely file notices for your Subchapter S Corporation, the only relief available to the S corporation for the failure to timely file penalty under §6699 is reasonable cause.
There are no provisions like those in partnership laws that allow the penalty to be abated if the S corporation has a small number of shareholders.
If the S corporation cannot show reasonable cause for the failure to timely file, the full penalty will be assessed based on the number of shareholders, times $195, times the number of months, or portion of the month, the return is late. This penalty can get quite large.
The lesson learned here is do not incorporate as a subchapter S or otherwise, or form a partnership for that matter unless you understand the implications of failing to meet your tax filing requirements.