Excite Tax's answer for Utah owners: delay adds IRS late-filing penalties of 5% of unpaid tax a month (IRC §6651), and catch-up cost scales with months of records and transactions.
Three things: how many months are missing, how many transactions are in them, and how many accounts each month has to be matched against. Current books are closed one month at a time; books that are behind are rebuilt month by month from statements, so the bill grows with the gap. The drivers are below.
Excite Tax's catch-up range is pending confirmation and will appear on pricing, dated, once set.
Penalties and interest, on top of a bigger job. A late return adds 5% of the unpaid tax for each month or part of a month, up to 25%, unpaid tax adds 0.5% a month, and interest runs at 7% a year for October to December 2026, compounded daily. A worked example is below.
Yes. A late Form 1120-S costs $255 per shareholder per month, for up to 12 months, whether or not the company owes tax; a partnership's late Form 1065 costs $255 per partner per month.
Sometimes, for one year. IRS relief needs the same return type filed on time for the prior three years, so it can reach the first missed year but not the ones behind it. The details are below.
Generally yes, as a business expense: the tax code allows a deduction for the ordinary and necessary expenses paid or incurred in carrying on a trade or business. The deduction lowers the cost of the work; it does nothing to a penalty already running.
Take a business that stopped keeping its books eighteen months ago, with a checking account, a credit card and a merchant processor. That is fifty-four monthly statements to match before the first late return can be prepared, against three a month for a business that is current. A quote for that job is a quote for fifty-four reconciliations and every transaction inside them, which is why a fair catch-up price is set after someone has looked at the statements, not before.
The IRS charges the two penalties month by month, and in a month when both apply it counts 4.5% for late filing and 0.5% for late payment. The late-filing part stops growing once it is full: it maxes out after 5 months, and the late-payment penalty continues.
A sole proprietor owes $8,000, then files and pays seven months late (IRC §6651; IRS, Failure to Pay Penalty)
| Penalty | Rate | Months charged | Amount |
|---|---|---|---|
| Failure to file | 4.5% a month | 5, then it stops | $1,800 |
| Failure to pay | 0.5% a month | 7 | $280 |
| Total penalties | $1,800 + $280 = $2,080, or 26% of the tax (the late-payment penalty is capped on its own, at 25%) |
Interest comes on top, from the due date until the balance is paid in full, at 7% a year for October to December 2026, compounded daily. Finishing the books stops none of it; filing the return and paying the tax does.
A small balance does not escape the penalty. A return more than 60 days late owes at least $525 or 100% of the unpaid tax, whichever is less, for a Form 1040 or 1120 due after 2025.
Two shareholders and a Form 1120-S filed eight months late come to $4,080 at $255 per shareholder per month, whether or not the company owes any tax. A partnership pays the same way on a late Form 1065, $255 per partner per month, for up to 12 months. Because this penalty is counted per owner rather than on tax owed, a company that made no money still pays it, and it is the cost a catch-up most directly stops.
Sometimes. IRS administrative relief covers the failure-to-file penalties on tax, partnership and S corporation returns, and the failure-to-pay penalty. It needs a clean record: the same return type filed on time for the prior three years, or 12 consecutive quarters.
The IRS now applies that relief without being asked, from summer 2026, to 2025 tax-year returns and later, under a program it calls Automatic Exemption from Penalty.
The catch is the look-back. A business that missed two years in a row has a clean history behind the first missed year and a late return behind the second, so this relief can reach the first year and not the second. Past that, the penalty does not apply if the failure was due to reasonable cause, which is a case made with facts, not a form.
Possible, if the statements exist and the time does too. The price is hours instead of a fee, and the penalty clock runs while the hours are found. The order matters more than the software: oldest month first, every account matched to its statement, then the next month. The steps are in how to catch up on bookkeeping, and the order of work before a deadline is in books not done before the tax deadline.
Monthly bookkeeping after the catch-up is a separate price; what a bookkeeper costs covers that side, and cleaning up messy books covers books that exist but are wrong.
Excite Tax's catch-up bookkeeping range are pending confirmation and will appear here, with a reviewed date, once confirmed.
Utah adds its own late-filing penalty to each state return: the greater of $20 or 2%, 5% or 10% of the unpaid tax, depending on how late it is. On $1,500 of unpaid Utah tax, a return filed more than 15 days late owes 10%, or $150.
Partnerships and S corporations get extra time to file a Utah return but must pay 100% of the tax due by the original due date, so a catch-up that runs past that date still needs a payment on time. The federal and Utah returns for a year come from the same books, so one catch-up serves both.
Hand the books over when keeping them costs more hours than the business can spare, or when they stop agreeing with the bank.
Excite Tax keeps these books; the return they feed is reviewed and signed by a licensed CPA at TBD CPA LLC.
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