Corporate filing question

[Ken]

What is the name of your state? DE

I incorporated in the state of Delaware back in 1994 for the purpose of being able to accept credit cards as a merchant, purchase business related supplies, pay for craft show booth fees and any supplies needed. I have never had employees and am just a crafter who sells on the web and at conventions.

I was told back in 1995 that as long as the corporation never made a profit and I never took a salary or payout from the corp. that I would never have to file a tax return for it. I still kept accurate records and even filled out the 1120 forms each year just in case the IRS asked for them but I have never been requested since I filed the one and only return back in 1994.

Essentially, since 1994 the corporation has only been used as a bank book to receive merchant funds and then spend all of its revenue in the products it manufactures and then turns it around into more costs to produce.

The cost of creating the products it sells has always been higher or a wash after advertising and marketing than the profit it made from the sale.

The only reason I incorporated was to be able to take CC and certain purchases and business manufacturing that I could not do if it was not through a corporation.

The corporation owns nothing and has no tangible assets. As a matter of fact it owes me personally money for the loans I have lent it over the years and technically is in the red from that.

Now that you know all that, here's my question:

I have recently been told by a friend that I may have still needed to file.

If so, will I suffer penalties for not filling even if their was NO net gain?


How the heck do you go about telling the IRS that you never filed since 1994?


Should I have all the returns ready to go and just send them all at once or should I just send them this years and let them ask me for the rest?


How many years can they demand a return from me that includes receipts and details proof etc.


Again they have never requested anything to date but after my friend told me they need a return anyway I really need to know how to go about this.

Thank you very much for any help and advice.

[abezon]

If this is a C-corp, you need to file any year you have income. The corp pays taxes & pays you a dividend, which goes on your tax return. If it's an S-corp, you have to file every year, but the corp pays no taxes. Instead, the corp issues a form K-1 which passes all profits/losses through to you & you report them on your return.

This assumes you still *have* a valid corp. Your corp may have been disbanded by state law for failure to file yearly returns, hold shareholders' meetings, etc.

There are many factors that change the answers here. I suggest you first contact DE & find out if they still list you as having a valid corp. Then you decide if you really want a corp at all, or if it was just a legal fiction you made up so the ACH folks would deal with you. Then go talk to a tax pro.

[Ken]

Thanks for taking the time to respond to me.

I am a C-Corp ( why I did that???) I never had shares sold.

No par value ever. never had meeting since I and my wife were the only folks on the charter.

We have always maintained paying the anual franchise tax with the agent in delaware. Yes the corp is still valid and current.

The average gross over the 10 years to date was low of 10K to high of 50K

all revenue was at risk and recycled into expenses for advertising and other non tangable investments. no inventoy at the end of the year.

Their may be a small net gain on 2005 due to less expenses.

Yes it was created to facilitate the ability to do bussiness when players would not do bussiness with an individual etc. The BS of bussiness you know.

what to do now ? can you answer these questions now that you know the above info?
>>>>>>

I know I owe the state the minimum tax which was $100. for each year then went to $250 in 02.

will I suffer penalties from the FEDS for not filling even if their was NO net gain?


How the heck do you go about telling the IRS that you never filed since 1994?


Should I have all the returns ready to go and just send them all at once or should I just send them this years and let them ask me for the rest?


How many years can they demand a return from me that includes receipts and details proof etc.


Again they have never requested anything to date but after my friend told me they need a return anyway I really need to know how to go about this.

[LdiJ]

You really did need to file. The fact that you had no net profit is helpful, but you really should have filed.

I would recommend that you get yourself a consult with a tax attorney for advice on how to best proceed.