I have an LLC in CA, taxed as a s-corp.
I already filed my final return w/ the IRS. I spoke to three IRS agents and nobody informed me about the form 966 until I called back, the fourth agent told me I needed to send in a 966.
The 966 is due within 30 days from the date you cancel your company and I am late about two months. Do I fill out the form 966 and send it out with my dissolution papers? Is there going to be any penalty for being late?
Employment / Labor Attorney
Form 966 is required to be filed within 30 days after the resolution or plan is adopted to dissolve the corporation or liquidate any of its stock.
Attorneys that are experienced with mergers, acquisitions, dissolutions, and liquidations, are usually aware of this filing requirement and is why an experienced attorney should be utilized.
In working with small business owners, I realize that the tendency sometimes is for the client to simply take on the task of “winding down” without legal counsel or relying on the assistance of an accountant who may not be experienced in this area, but “when you don’t know what you don’t know” is how problems and issues subsequently develop, and ignorance of the law and filing requirements is not a legitimate excuse for professionals with integrity and ethical responsibility.
From a practical viewpoint, in situations where Form 966 has not been filed within the prescribed time, I have either filed, or advised the client to file it with an attachment explaining why the form was not filed timely, or depending upon the amount of time that has passed, simply attached Form 966 together with its required attachments to the final corporate tax return filing.
The important thing is that form 966 is eventually filed. That's the bottom line.
Also, remember that your creditors must get notice of your company's intent to dissolve. You will need to give notice explaining to each that you are in the process of dissolving your LLC. The purpose of the letter is to explain that it is your desire to settle your account with each creditor. Once you have filed the proper LLC dissolution and properly communicated with your creditors, the owners of the LLC can divide up the assets. California however requires you to pay your creditors before you liquidate and divide up your assets. At the Law Office of Pettibone & Associates we have assisted numerous companies with the dissolution process.
All Dissolved corporations must file IRS Form 996 with the IRS. This filing is required within 30 days after the final Dissolution plan is approved. Filing IRS Form 996 lets the Federal Government know that your business has been legally dissolved so that it may take the appropriate actions. If you did not file the form timely, you still need to file the form and attach an explanation letting the government know why the form was late.
Potential penalties are as follows (although I have not heard of the IRS actually charging these penalties):
Penalties for Corporations:
Section 6653(c) of the Internal Revenue Code defines the penalties for failing to file Form 966. The basic penalty for failing to file a Form 966 within 30 days of adopting the resolution to dissolve is $10 per day. However, the maximum penalty for the organization for failing to file any single Form 966 is $5,000. If the resolution or plan to dissolve is amended, two Form 966s would need to be filed, so the total penalty could be $10,000.
Penalties for Managers:
If the IRS determines that a corporation has failed to file a Form 966, the IRS may send a written demand to the management of the corporation to file the necessary forms by a reasonable date. If the filing is not made by the specified date, the person responsible for the filing will be individually fined $10 per day for every day the filing is late, up to a maximum of $5,000.
Any individual seeking legal advice for their own situation should retain their own legal counsel as this response provides information that is general in nature and not specific to any person's unique situation. Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency.
All I have to add is that you can see for yourself if the form is required to be filed just by looking at the form instructions: The previous answers more than cover your quesiton.
See Link below.
Best of luck.