Late 1065 and 1120-S Penalty: $260 per Person (2027)

17 October 2026 · Educational information · No affiliate links · 3 min read

General information, not tax, legal or financial advice. We are not the IRS. Check IRS.gov or a qualified tax professional. Sources read on October 17, 2026. Dates after 2026 are expected and amounts for 2026 returns may change. This page contains no affiliate links.

Short answer: for returns due in 2026 (tax year 2025), the late-filing penalty is $255 per partner or shareholder for each month or part of a month, up to 12 months (2025 IRS instructions). For returns required to be filed in 2027 (tax year 2026), Rev. Proc. 2025-32 sets the amount at $260 per person per month. The 2026 form instructions have not been published yet.

Form 1065

A penalty is assessed if the partnership fails to file by the due date, including extensions, or files a return that fails to show all required information, unless due to reasonable cause. The 2025 instructions: $255 (returns due in 2026; $260 for returns due in 2027) for each month or part of a month (up to 12 months) the failure continues, multiplied by the total number of persons who were partners during any part of the tax year.

Form 1120-S

If no tax is due: $255 per month or part of a month (up to 12 months; $260 for returns due in 2027) multiplied by the number of persons who were shareholders during any part of the tax year.
If tax is due: the amount 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.
For a return required to be filed in 2026 that is more than 60 days late, the minimum penalty is the smaller of the tax due or $525; for a return required to be filed in 2027, Rev. Proc. 2025-32 sets it at the lesser of $535 or 100% of the tax required to be shown.
Late payment: generally ½ of 1% of unpaid tax per month or part of a month, up to 25%.

Example (made-up numbers)

A calendar-year partnership with 4 partners files 2 months and 10 days after the due date, so 3 months or parts of months count. Using the $260 amount for returns due in 2027: 3 x 4 x $260 = $3,120 (with the $255 amount for returns due in 2026 it would be $3,060), if no reasonable-cause relief applies.

Small partnerships

The IRS says small partnerships that meet certain conditions (10 or fewer partners, each an individual other than a nonresident alien or the estate of a deceased partner, with items allocated in the same proportion, and each partner having reported their share on a timely filed return) may be eligible for relief under Rev. Proc. 84-35 (IRS, Failure to file penalty).

Reasonable cause

The instructions say the penalty is not imposed if reasonable cause is shown. If a notice arrives after filing, the entity may send an explanation; the 1065 instructions say not to attach one to the return.

Separate K-1 penalties: Schedule K-1 due dates. An extension: Form 7004.

FAQ

Is the penalty per entity or per person? Per partner or shareholder, per month.

Does an extension remove it? An on-time Form 7004 extends the filing date, so the penalty is measured from the extended due date.

What we could not verify

The 2026 form instructions are not published; the $260 figure comes from Rev. Proc. 2025-32.
IRS abatement programs and first-time relief for these returns: not read.

Sources (official)

IRS, Instructions for Form 1065 (2025) (read October 17, 2026)
IRS, Instructions for Form 1120-S (2025) (read October 17, 2026)
IRS, Instructions for Form 7004 (12/2025) (read October 17, 2026)
IRS, Rev. Proc. 2025-32 (sections 4.52, 4.55, 4.56) (read October 17, 2026)
IRS, Failure to file penalty (read October 17, 2026)