23 Aug What Happens If You Fail to File before the Extension Deadline?
The business tax extension deadline is now less than a month away. When you filed for your tax extension back in March, the additional six months you received to file that return may have seemed like plenty of time. However, that time is almost up, and it’s extremely important that you file your business tax return by September 15th. Keep reading to learn the consequences your business can face if you fail to file on time.
Types of Fees and Penalties
The IRS applies a number of different fees and penalties to late tax returns, including:
- Late filing penalties
- Late payment penalties
- Underpayment penalties
- Interest payments
When you applied for your business tax extension, you should have made a payment for the estimated amount you would owe upon filing, if applicable. Hopefully, this will minimize the expenses associated with the last three fee types listed above. This does still mean that you’ll be paying late filing penalties if you miss the business deadline; additionally, if your estimated payment was less than what you actually owed, you could face late and underpayment penalties on the unpaid amounts. Generally, Partnerships and S-Corporations do not owe federal tax and no estimated payment will be necessary to the IRS.
Amount You’ll Owe
The exact amount you’ll be penalized is based on two different factors: how much you owe in taxes, and your business entity type. Partnerships, for example, are penalized $195 for every month or portion of a month that they are late in filing, multiplied by the total members in the partnership (this can be applied for a maximum of 12 months). So, if your partnership files three months late and you have four members in your partnership, your business would owe $2,340 in late filing penalties ($195 x 4 x 3). S Corps are penalized at the same rate, but multiplied by the number of shareholders, rather than the number of partners.
Different late filing penalties may apply to your business, so if you are late in filing your business tax return, we encourage you to reach out to our Provo business tax professionals to determine what penalties you might be facing.
Ensure You Don’t Miss the Tax Deadline
September 15th will be here sooner than you think. It’s important to address your business tax return now, so that you don’t miss the deadline and face the fees and penalties mentioned above. We encourage you to reach out to The Accounting Guys today and schedule an appointment with one of our CPAs. We can assist you with preparing and filing your return while also providing insight into tax strategies that can help to lower your overall tax liability in future tax years.