Updated November 5, 2026. Quick answer: For an S corporation return required to be filed in 2028 (tax year 2027), the dollar amount in the section 6699 late-filing penalty is $265 per shareholder for each month or part of a month, up from $260 for returns filed in 2027, per IRS Rev. Proc. 2026-35, announced November 5, 2026. The penalty runs for up to 12 months.
The 2028 amount
Rev. Proc. 2026-35 states: “In the case of any return required to be filed in 2028, the dollar amount used to determine the amount of the penalty under § 6699(b)(1) is $265.”
| Return required to be filed | Penalty per shareholder per month | Source |
|---|---|---|
| Filed in 2026 | $255 | Instructions for Form 1120-S |
| Filed in 2027 | $260 | Rev. Proc. 2025-32, item .56 of section 3 |
| Filed in 2028 | $265 | Rev. Proc. 2026-35, item .61 of section 3 |
What section 6699 says
The statute makes an S corporation liable if it does not file on time or files an incomplete return: “such S corporation shall be liable for a penalty determined under subsection (b) for each month (or fraction thereof) during which such failure continues (but not to exceed 12 months), unless it is shown that such failure is due to reasonable cause.” The monthly amount is the dollar figure multiplied by “the number of persons who were shareholders in the S corporation during any part of the taxable year.”
The Form 1120-S instructions add how it combines with a tax bill: “For returns on which no tax is due, the penalty is $255 for each month or part of a month (up to 12 months) the return is late or doesn’t include the required information, multiplied by the total number of persons who were shareholders in the corporation during any part of the corporation’s tax year for which the return is due.” “If tax is due, the penalty is the amount stated above plus 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.”
What it costs, and how the figure is set
An invented S corporation with 3 shareholders that is two months late owes $265 times 3 shareholders times 2 months, or $1,590 (computed). At the 12 month maximum it owes $265 times 3 times 12, or $9,540 (computed). Every person who was a shareholder during any part of the year counts.
The statute’s base figure is $195, indexed from a 2013 base, and it rounds down to a multiple of $5: “If any amount adjusted under paragraph (1) is not a multiple of $5, such amount shall be rounded to the next lowest multiple of $5.” Check: $265 and $260 are multiples of $5 (computed). The cost-of-living factor is not printed in the Rev. Proc., so this checks the rounding and not the factor.
Where it connects to the return
The return is Form 1120-S, the due date and extension are on the Form 1065 and 1120-S due date for 2027, and the extension form is Form 7004. The tax and payment lines are on Form 1120-S lines 23 to 28, taxes, payments and amount owed. Relief for a first miss is on first time penalty abatement.
Common mistakes
- Treating $265 as a flat penalty. It is multiplied by the number of shareholders and by the months late, up to 12.
- Forgetting the second layer. When the return shows tax due, the instructions add 5% of the unpaid tax for each month, up to 25%.
- Using $260 for a 2027 tax year return. The Rev. Proc. sets $265 for returns required to be filed in 2028.
Related: Form 1120-S, the Form 1065 and 1120-S due date for 2027, Form 7004, and first time penalty abatement.
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Answer againSources
- Internal Revenue Service, Rev. Proc. 2026-35, tax year 2027 inflation-adjusted amounts (announced November 5, 2026): www.irs.gov
- Internal Revenue Service, Rev. Proc. 2025-32, tax year 2026 inflation-adjusted amounts, as modified by the One, Big, Beautiful Bill Act: www.irs.gov
- 26 U.S.C. 6699, Failure to file S corporation return (U.S. Code, U.S. Government Publishing Office): www.govinfo.gov
- Internal Revenue Service, 2025 Instructions for Form 1120-S: www.irs.gov
Read from the primary documents linked above on November 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the IRS itself is the right place to confirm anything consequential.