Frequently Asked Questions
Extensions and Late Filing for Businesses
What’s the difference between filing extensions and late filing?
Filing an extension on or before the original due date of the return gives you extra time to get all of your documents together to complete an accurate tax return. Payment for the tax due is sent with Form 7004 or Form 4868 at the time your request to file for an extension.
If you fail to file for an extension, it will be considered as late filing and will result to late filing and late payment penalties.
If I file for an extension before my original tax deadline, should I wait to pay my taxes due on the extension deadline?
No. An extension to file does not mean an extension to pay your taxes. While you can file your taxes later after requesting an extension, you will still have to pay any taxes you owe by the original due date of your return.
If you don’t pay your taxes owed by the original due date, the IRS can charge you with late payment penalties.
However, if you are able to pay 90% of the tax due on its due date, the failure to pay penalty will not be imposed if the remaining balance is paid by the extended due date.
How does Greenback Business Services handle extensions?
We e-file extensions for free for our clients who won’t be able to meet the deadline, two weeks before the original due date of the return.
If I file for an extension, how long do I have to file my original income tax return?
For partnership LLCs and S Corps, the extension deadline is September 16, 2019, six months after the original March 15 deadline.
For C Corps and Sole Proprietors, the extension deadline is October 15, 2019, six months after the original April 15 deadline.
What happens if I forget to file for an extension before the tax filing deadline?
If you were not able to file an extension by the original due date of the return, it’s considered late filing. Late filing results in late filing penalties, so you should file as soon as possible to minimize such penalties and interests.
We suggest getting in touch with us as soon as you realize that you are already late with your filing. Send us all the necessary documents needed for the tax return and keep an eye on the filing process.
How much is the IRS penalty for filing late?
A failure to FILE penalty is imposed if the return is not filed on its due date. It is also imposed if you do not request an extension.
For C Corporations, there are no penalties for late filing if there is no tax due. But, if Form 1120 is showing an income tax due, the monthly penalty is 5% of the unpaid tax up to a maximum of 25%. Returns which are more than 60 days due are imposed with a minimum penalty of smaller of the tax due or $135.
In addition to above, a failure to PAY penalty is applied for the failure to pay the tax due, in part or in full, on the due date of the return not including extension. A failure to pay penalty is ½ of 1% of the unpaid taxes for each month the tax due remains unpaid.
The longer you wait to file and fail to pay, the more fees and interest you will incur.
Is there a maximum amount the IRS can fine for late filing?
If a US person fails to timely file Form 5471 or 8865, the IRS may assert a $10,000 penalty for each failure, for each applicable annual accounting period, plus an additional $10,000 for each month the failure continues, beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $60,000 per return (initial penalty of $10,000 plus the continuation penalty maximum of $50,000 per return).
For foreign shareholders who fail to timely file Form 5472, the IRS may assert a $10,000 penalty for each failure for each applicable tax year, plus an additional $10,000 for each month the failure continues, beginning 90 days after the taxpayer is notified of the delinquency. The statute does not provide a maximum penalty with respect to Form 5472.
Is there any way I can avoid paying late filing penalties imposed by the IRS?
The only way to avoid late filing penalties is by filing your return or requests for extensions on time and paying your taxes by the due date.