S corp question

There are dozens of threads on this.

1) Fire the client.

2) File late PR tax returns & W-2's.  Yep, there will be penalties.  The price one pays for not following the very specific rules that are stated in the letter from the IRS granting S-Corp status.   THIS is the correct way to do it.

3) Flush the "reasonable salary" amount thru a Sch C with a deduction for the amount on the S-Corp.      The taxpayer will pay *APPROXIMATELY* the same taxes (income & SE Tax)... but the State PR departments get screwed.    I personally won't do this.  My license is too important to me to take the risk for a client that could easily turn on you when the IRS comes knocking.    YMMV

Here's one:

https://proconnect.intuit.com/community/tax-talk/discussion/1099-nec-can-it-be-used-to-pay-and-s-corp-owner-as-salary-at/00/233333

"I was thinking a zero based 1120S and a Schedule C for the business dedutions and income"

First, that's just operations.

Second, if they paid themselves a wage, it is a deduction. So, they are missing that benefit, with your idea.

Third, if they took any money at all, and you both consider that Distribution, Dividend, or Draw, you are both wrong. You cannot take money from the corporation for personal funds and show no payroll if the shareholder(s) worked for the corporation. That's why it's called Reasonable Wage = for services provided, you get paid the going rate for that work and those efforts and that time spent.

If all of the work was done under the aegis of this corporation, which has its own FEIN as well, including all the protections incorporation offers (benefit plans, insurance, legal protection, contracts, etc), it's time to catch up all the missed and overlooked things.

If the person did all of 2022 business under their own name and SSN, then the corporation was overlooked entirely.