As a newcomer to this community, I'm really impressed by how supportive and knowledgeable everyone has been in this thread. I'm actually facing a somewhat similar situation with my small S-Corp - not a missed deadline, but I'm in the middle of switching accountants and feeling overwhelmed by all the paperwork and deadlines. Reading through all these responses has been incredibly educational. I had no idea about things like First-Time Penalty Abatement or that S-Corps without direct tax liability might face minimal penalties for late filing. The resources people have shared (taxr.ai and Claimyr) sound like they could be really valuable for anyone dealing with IRS issues. What strikes me most is how common these situations seem to be, and how the IRS appears to be more reasonable than I expected when there are legitimate circumstances involved. The advice about documenting everything and not rushing to file incorrectly is something I'm definitely going to keep in mind as I work with my new accountant. To the original poster - it sounds like you're getting excellent advice here and you're taking the right steps to resolve this. The community support here is amazing, and it's clear you're not alone in dealing with these kinds of business tax challenges. Thanks to everyone for sharing their experiences and knowledge!

As a newcomer to this community, I'm amazed at how helpful and thorough everyone's responses have been! I'm currently dealing with my first year operating an S-Corp and this thread has been incredibly educational about potential pitfalls I need to avoid. The distinction everyone's made between S-Corps with and without direct tax liability is something I never fully understood before. It's reassuring to know that if you're in a pass-through situation with no corporate-level taxes, the penalties for late filing might be minimal or even zero. That takes a lot of the fear out of the process. I'm also bookmarking the resources mentioned here - taxr.ai for penalty analysis and Claimyr for actually reaching the IRS. As someone who's never had to deal with business tax issues before, knowing these tools exist gives me confidence that if I ever face a similar situation, there are practical solutions available. To the original poster, it sounds like you're getting excellent guidance here and taking all the right steps. The fact that you're being proactive about resolving this shows good business judgment, even if the initial deadline was missed. Best of luck with your new accountant meeting next week!

Quick question for those who know - does anyone have experience with the statute of limitations for unfiled gift tax returns? I'm in a similar boat where I made 529 contributions over several years without filing Form 709. Some of these were over 6 years ago. Should I still file for those older years?

I've been following this thread closely as someone who went through a very similar situation about two years ago. After 15 years of funding our kids' education through various methods, I discovered I had completely missed the gift tax reporting requirements. One thing I learned that might help you: the IRS has a "reasonable cause" provision for late-filed gift tax returns when no actual tax is owed. Since most people are nowhere near the current lifetime exemption limit ($13.61 million for 2024), you typically won't owe any actual gift tax - just need to properly report your use of the exemption. I ended up filing Form 709 for about 8 different years. The process was tedious but not as scary as I initially thought. The key is being thorough and consistent in your documentation. I created a spreadsheet tracking every contribution by year, child, and source (529 vs. direct tuition payments). Also worth noting: if you have good records showing the contributions were legitimate educational expenses, the IRS is generally reasonable about late filings in these situations. They understand that many parents are genuinely unaware of the gift tax implications of funding their children's education.

Can someone explain the actual math difference between paying properly vs under the table? If I'm paying someone $20/hr for 40hrs/week, what's the actual cost difference?

Thanks for breaking down the real costs, everyone. As someone who's been through this decision process, I want to emphasize that the "savings" from paying under the table are largely illusory once you factor in the lost tax deductions. When I calculated it for my business, paying a $40K employee properly costs about $45-48K total, but I get to deduct the full amount from my business income. If I'm in a 25% tax bracket, that deduction saves me $11-12K in taxes. So my real cost is more like $33-37K. Paying $40K under the table means no deduction, so I'm paying the full $40K after-tax dollars PLUS taking enormous legal and financial risks. The math just doesn't work unless you're planning to never report the income properly - which opens you up to fraud charges, not just tax penalties. The administrative burden of proper payroll is also much less scary than it seems. There are affordable payroll services that handle everything for under $100/month for a single employee.

Great thread everyone! As someone who's been doing small business payroll for 8 years, I want to add a few key points that might help newcomers like Omar: 1) The December shutdown is frustrating but predictable - use it to your advantage by getting organized early rather than stressing about transmission timing. 2) Don't forget that your employees need their W-2s by January 31st regardless of when you submit to SSA. Many business owners focus on the government deadlines and forget about the employee deadline. 3) If you're using a payroll service, ask them NOW about their year-end timeline. Some providers have different cutoff dates for year-end processing that are earlier than you'd expect. 4) Keep good records of your submission confirmations. Whether you use third-party tools or just screenshot everything, having proof of timely submission can save you major headaches if there are processing delays or questions later. The learning curve is steep in your first few years, but once you understand the rhythm it becomes much more manageable!

As a federal employee who works adjacent to IRS systems, I can add some inside perspective on the shutdown timing. The December maintenance window is actually mandated for security updates and system modernization - it's not optional for the IRS. What many people don't realize is that this shutdown affects different systems differently. The e-file system goes down, but other IRS functions continue. So if you need to call about account issues or payment questions, those phone lines stay open. One tip I'd add to this great discussion: if you're really concerned about timing, you can always file a paper backup of critical forms. It's more work, but paper submissions aren't affected by the e-file shutdown. For a small business owner like Omar, having that peace of mind might be worth the extra effort in your first few years. The IRS actually appreciates when taxpayers plan ahead like you're doing. Shows you're taking compliance seriously rather than scrambling at the last minute like so many do.

I've been following this thread closely because I'm dealing with a very similar situation right now. My business partner (also a foreign national) asked me to help with their EIN application last month, and I'm now wondering if I made the same mistake you did. One thing I want to add that hasn't been mentioned yet - if your friend's LLC is registered at the state level, make sure the responsible party information matches between the state registration and the federal EIN. Having mismatched information between state and federal records can create additional complications down the road, especially if there are ever any audits or compliance issues. Also, while you're getting this sorted out, I'd recommend documenting everything in writing. Keep copies of all forms you file, notes from phone calls with the IRS (including dates, times, and the names of representatives you spoke with), and any correspondence you receive. If there are ever questions later about who the actual business owner is, having a clear paper trail will be invaluable. The fact that you're catching this early is really good - I've heard horror stories of people not realizing this mistake until tax season, which creates much bigger headaches. Good luck getting it resolved!

This thread has been incredibly helpful! I'm actually in a similar situation where I helped a friend apply for an EIN and I'm now worried I might have made the same mistake. One thing I wanted to add that I learned from my accountant - if you're listed incorrectly as the responsible party, it's not just about tax liabilities. It can also affect your personal credit if the business has any issues with the IRS down the line. The responsible party designation creates a legal connection between you and the business entity that goes beyond just taxes. Also, for anyone dealing with this issue, I'd suggest reaching out to the person you helped ASAP to make them aware of the situation. They need to understand that until this gets corrected, they might not receive important IRS correspondence about their business, which could lead to missed deadlines or penalties. In my case, my friend had no idea there was an issue until I told him, and by then we'd already missed a quarterly filing notice that came to me instead of him. The sooner everyone involved understands the scope of the problem, the faster you can work together to get it resolved properly.