Rev. Proc. 84-35 provides a reasonable-cause safe harbor for certain small partnerships. Under this procedure, a domestic partnership composed of 10 or fewer partners, each of whom is a natural person (other than a nonresident alien) and each of whom has fully reported his or her share of the income, deductions, and credits of the partnership on timely filed income tax returns(including extension), is considered to have met the reasonable cause test and is not subject to the penalty under Sec. 6698.
If a partnership of 10 or fewer partners fails to qualify for relief under Rev. Proc. 84-35, the partnership may still show reasonable cause for failure to file a timely and complete return (Rev. Proc. 84-35, ยง3.03).
Though S Corp are also considered pass thru entities there is no clear guidance if the S Corp can also qualify for this safe harbor and get relief from any statutory penalty for the late or incomplete filing of Form 1120S.