IRS Penalty for Late Filing of Form 1120: 2026 C-Corp Guide
The irs penalty for late filing of form 1120 is a financial charge applied to C-Corporations that miss their annual tax return deadline. For the 2026 tax season, this penalty is typically 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25%. If the return is more than 60 days late, the minimum penalty for a 2026 filing is $525 or 100% of the tax due, whichever is smaller.
In this guide, we will explain how the irs penalty for late filing of form 1120 is calculated, the specific 2026 deadlines for C-Corps, and how interest—currently at 7%—affects the total balance. We will also cover how a corporation can request penalty abatement if the delay was due to reasonable cause.
How the C-Corp Late Filing Penalty Works
Unlike partnerships or S-Corps that are penalized per owner, a C-Corporation is a separate taxable entity. Therefore, the irs penalty for late filing of form 1120 is primarily based on the corporation’s own tax liability. If the corporation owes no tax, there is generally no penalty for filing late, though it is still highly recommended to file on time to maintain “good standing” with the IRS.
However, if there is a balance due, the costs stack up quickly. The IRS combines the failure-to-file penalty (5%) with the failure-to-pay penalty (0.5%), but reduces the filing penalty by the payment penalty amount in months where both apply. This results in a maximum combined monthly charge of 5%.
Quick Tip: Even if your corporation cannot afford to pay its tax bill, you should still file Form 1120 on time. This eliminates the 5% monthly irs penalty for late filing of form 1120 and leaves you only with the smaller 0.5% payment penalty.
Takeaway: For C-Corps with a tax liability, filing late is ten times more expensive than paying late.
2026 C-Corp Deadlines and Extensions
To avoid the irs penalty for late filing of form 1120, you must file by the 15th day of the 4th month following the end of the corporation’s tax year. For most “calendar year” corporations, the 2026 deadline is April 15, 2026.
- Automatic Extension: Filing Form 7004 by the April deadline provides a 6-month extension to October 15, 2026.
- Extension Limitations: An extension only grants more time to file the paperwork. It does not grant more time to pay the tax.
- Payment Requirement: To avoid payment penalties during the extension period, the corporation should pay its estimated tax balance by the original April deadline.
C-Corp Penalty & Interest Summary (2026)
| Charge Type | 2026 Rate | Maximum Limit |
|---|---|---|
| Late Filing Penalty (Form 1120) | 5% per month | 25% of unpaid tax |
| Late Payment Penalty | 0.5% per month | 25% of unpaid tax |
| IRS Interest (Compounded Daily) | 7% per year | No Limit |
Takeaway: Filing Form 7004 is a free way to protect your corporation from the 25% late filing cap.
How to Calculate Your Corporate Penalty
Calculating the irs penalty for late filing of form 1120 involves multiplying the unpaid tax by the 5% rate for each month the return is late. If the return is filed 3 months late and the corporation owes $10,000, the penalty would be $1,500 ($10,000 x 0.05 x 3).
You can use our IRS Penalty Calculator to run these numbers for your business. For a deeper look at interest, visit IRS Interest on Late Taxes. If your business is an S-Corp instead of a C-Corp, the rules are different; please see our S-Corp 1120-S Penalty Guide.
Takeaway: Manual calculations are helpful, but using a dedicated tool ensures you account for daily compounding interest correctly.
Corporate Penalty Abatement and Relief
If your corporation receives a notice for an irs penalty for late filing of form 1120, you can request “Penalty Abatement”. The IRS may remove the penalty if you can demonstrate Reasonable Cause.
- Death or Illness: Serious health issues affecting the corporate officer responsible for filing.
- Natural Disasters: Fires, floods, or storms that destroyed corporate records.
- First-Time Abate: While more common for individuals, corporations with a clean 3-year history may also qualify for a one-time waiver of certain penalties.
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Frequently Asked Questions
What if my corporation is due a refund but I file late?
There is no irs penalty for late filing of form 1120 if you are due a refund. However, you must file within three years of the due date to claim that refund, or the money becomes the property of the U.S. Treasury.
Is the penalty higher for large corporations?
The percentage (5%) remains the same, but the interest rate can be higher. “Large” corporations (those that owe more than $100,000) are charged a higher interest rate—typically 2% higher than the standard rate—once they receive a final notice.
Does the penalty apply to state corporate taxes?
No. This guide only covers federal IRS penalties. States have their own corporate filing requirements and penalties, which are often separate from the irs penalty for late filing of form 1120.
What is the penalty for an “incomplete” Form 1120?
The IRS can deem a return as “not filed” if it is missing essential information or a valid signature. This could trigger the full irs penalty for late filing of form 1120 even if the paperwork was mailed on time.