Penalties for late-filing Form 1120

For tax year 2024 (returns due in 2025), a corporation that fails to file Form 1120 (U.S. Corporation Income Tax Return) by the due date, including extensions, may be subject to a late-filing penalty. The penalty is 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. If both the late-filing and late-payment penalties apply for the same period, the late-filing penalty is reduced by the amount of the late-payment penalty for that period.

If the return is more than 60 days late, a minimum penalty applies. For returns required to be filed in 2025, the minimum penalty is the lesser of the tax due or $510. This amount is adjusted for inflation annually. The penalty will not be imposed if the corporation can show that the failure to file on time was due to reasonable cause and not willful neglect. If the corporation receives a penalty notice, it should provide an explanation to the IRS, which will determine if reasonable-cause criteria are met. Other penalties may also apply for negligence, substantial understatement of tax, reportable transaction understatements, and fraud.