State Return

[sabbry]

Our web design firm incorporated in October of 2008. We didn't collect any money or acquire any assets that calendar year.

We started taking money and purchasing assets in January of 2009 -- the next calendar year. My partner filed a 2008 Federal return, but according to him, neglected to file a State return.

My question is: how serious is this if the state is just going to see 0's and signatures? Should I be seeking legal counsel? Should I contact the state?

[Evan]

It depends on the state. Some states have a minimum business tax which was due as of April 15, 2009. The state will want interest on that money, plus penalties for not filing on time.

[Evan]

And unless the cost of incorporation is FREE in your state, or you incurred no start up expenses, you had a LOSS during your first year which you didn't take.

Assuming you all had basis, you would have had a loss that would have reduced your taxable income.

Oh well! Just file the state return late. If there are penalties or interest, you'll get a bill.

And make sure you don't deduct the penalties and interest -- it's a non-deductible expense!