Penalty for not filing 1120s on time

Consequences for late payment or non-payment of taxes

IRAS may take the following actions if you fail to pay by the due date:

1. Impose late payment penalties
2. Appoint agents like your company’s bank, tenant or lawyer (handling the sale of any of your property) to recover the overdue tax
3. Take legal action

The above list is not exhaustive.

Late payment penalty

A 5% late payment penalty will be imposed on the unpaid tax if full payment is not received by the due date of the NOA.

Company X received an NOA dated 1 Jun 2020. The due date for the tax payable of $10,000 is 1 Jul 2020 (one month from the date of NOA). As Company X did not pay the tax by 1 Jul 2020, a 5% late payment penalty of $500 (i.e. 5% x $10,000) was imposed.

If you have filed an objection and are awaiting the outcome, you still must pay the tax assessed as shown in the NOA. Excess payment will be refunded to your company if the assessment is revised.

Company Y received an estimated NOA, with a tax payable of $10,000, dated 1 Aug 2020. The due date for payment is 1 Sep 2020 (one month from the date of NOA).

The company filed an objection and did not pay the tax. As no payment was received by the due date, a 5% late payment penalty of $500 was imposed.

The company paid the tax and penalty on 30 Sep 2020. On 9 Oct 2020, the Assessment was amended to $1,300 and the late payment penalty was revised to $65 (5% late payment penalty on $1,300) accordingly. A refund of $9,135 was made to the company.

If the tax remains unpaid 60 days after the imposition of the 5% late payment penalty, an additional penalty of 1% per month may be imposed for every completed month that the tax remains unpaid, up to a maximum of 12% of the unpaid tax.

Company Z did not pay the tax payable of $10,000 by the due date on the NOA, and received a late payment penalty notice dated 2 Jul 2020 informing the company of the overdue tax and the 5% late payment penalty. 

The due date for payment of tax and penalty (i.e. $10,500) on the notice was 2 Aug 2020 (one month from the date of the late payment penalty notice).

As the tax was unpaid for 1 completed month after 60 days from the late payment penalty notice due date, a 1% additional penalty was imposed on 2 Oct 2020. 1% penalty will continue to be imposed for each additional month that the tax remained unpaid.

Company Z eventually paid the tax and penalties on 15 Nov 2020.

The total penalty imposed was $700 (i.e. 5% penalty x $10,000 plus 1% additional penalty x $10,000 x 2 months).

$500

($10,000 x 5%)

$200

($10,000 x 1% x 2 months)

Appealing for waiver of late payment penalty

Appeals must be made online via our Request Penalty Waiver/ Extension of Time to File digital service at mytax.iras.gov.sg.

Appeals will only be considered if:

1. You have paid the overdue tax in full*, by the due date as stated in the late payment penalty notice; and
2. No waiver has been granted in the past 2 calendar years up to date

*Payment must be reflected in your tax account.

Appointment of agents

If the tax remains unpaid, IRAS may appoint agents like your company’s bank, tenant, lawyer or other 3rd parties with money due to you to recover the taxes owing.

When your company’s bank is appointed as the agent, you will experience inconvenience in using the bank accounts (e.g. being unable to access the bank accounts) until you have fully paid your Corporate Income Tax.

Requests made for release of your banks from the agent appointment after 12pm on weekdays will only be processed on the next working day while requests cannot be processed on Saturdays, Sundays and Public Holidays.

Agents will be released from the appointment only after the tax and penalties have been paid in full.

Checking tax balance and making payment

To check your current balance, log in to mytax.iras.gov.sg and select "View Account Summary”. You can make Corporate Income Tax payments through various payment modes. The payment will be processed after 3 working days.

Difficulty paying your tax

If you face difficulties with your tax payment, you may apply for a longer payment plan via the Apply for Payment Plan digital service at mytax.iras.gov.sg.

If your payment plan is approved, you must follow the payment plan schedule. Otherwise, the plan will be cancelled and actions will be taken to recover the tax.

GIRO cancellation or termination

You are advised to maintain enough funds in your bank account. If your GIRO deduction is unsuccessful due to insufficient funds in the bank account, or incorrect limits set, etc., IRAS will cancel your GIRO plan. The balance of the unpaid taxes becomes due and payable immediately. You may be imposed a penalty if you do not settle the unpaid taxes promptly.

If you repeatedly default on your payment plan, IRAS may disallow your subsequent requests for a payment arrangement.

FAQs

If you fail to make payment for your overdue tax, IRAS may appoint your banks, tenant, lawyer, etc. as an agent to recover the unpaid tax.

Your appointed agent(s) will be required to pay moneys due to you to the Comptroller to settle your tax liabilities. The appointment will be released when the overdue tax is settled in full.

For more details on appointment of agents, you may use our Ask Jamie Virtual Assistant (available 24/7) at the side of this webpage.

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