A partnership was issued a 1099-nec with the NY state marked. They are not located in NY nor was the work done in NY

The partnership used to be located in NY.  But, when the two partners (a married couple) moved to Spain about 7 years ago, we moved the partnership from NY to Delaware

The work was done in Spain.  

They did work for this company years ago when the partnership was based out of NY.  

So they still had their NY address.  They did mark box 8 as NY payer and had the full 1099-NEC amount allocated to Box 7 state income

The issue is that I didn't know about this when I did the IRS and DE extension.  There is a $50 penalty per shareholder per month for the NY return.  Which would be $600.

I highly doubt the payer is going to change it now on September 13.  Client didn't notice it when they received it.  They just sent me their documents about 10 days ago, so even if I noticed it then, it was already past the time the payer would probably change it

So, is this something where i should file NY.  Then try and fight the penalties when they get a notice.

Or just file IRS and DE and not bother with NY.  I'm sure the correct thing to do is file NY

I've never had this issue with a partnership outside the US before that files in Delaware.  Which is why I am asking

There wouldn't be any tax due with the NY partnership return.  The 1099-NEC is a small amount.

It is just the not filing an extension penalty I would be dealing