Late Filing of Business Returns
Beginning in 2011, the instructions to Form 1065, Form 1120 and Form 1120S (and other forms in the 1065 and 1120 series) direct taxpayers to wait until they receive a late filing notice from the IRS before sending a reasonable cause explanation instead of attaching it to the late filed return, as instructed in 2010 and earlier years. The caution reads as follows:
If the corporation receives a notice about interest and penalties after it files its return, respond with an explanation and we will determine if the corporation meets reasonable-cause criteria. Do not attach an explanation when the corporation’s return is filed.
Individual taxpayers can still include a reasonable cause explanation with Form 1040. The failure to file penalty under IRC Sec. 6651 does not apply if the taxpayer can show that any delay was due to reasonable cause and not willful neglect.
(This penalty is substantial and is added to the late payment and late interest penalties.)
Source: NATP