Quite a bit of confusion begins to stir around this time of year. Many taxpayers contact us requesting a “second extension” as the deadline approaches because they might not yet be ready to file their tax return. This stems from old extension procedures IRS had, where a "second extension" of time to file could be requested using Form 2688. Under the old extension procedures, you would request an automatic 4-month extension followed by a 2-month second extension. Since the inception of the Form 7004, the extension now grants you an extra six months to file your taxes, but there is no second extension.
For Corporations (Form 1120) and S-Corporations (Form 1120-S) with a fiscal year-end of December 31, the deadline to file a tax return was March 15. For many of these businesses, the required documentation may not have been finalized or available to prepare the return, so an extension of time to file may have been requested. The IRS will allow an automatic 6 month extension to file the return if a Form 7004 is filed by the original tax deadline. An extension does not extend the amount of time to pay the tax due on the return. It is an extension of time to file, not an extension of time to pay. Any taxes due are still due on the initial deadline or additional penalties and interest will be assessed from the original filing deadline.
The Form 7004 can be filed electronically with IRS and within minutes from filing, the IRS will accept the form. Once the form is accepted, the filer will receive a confirmation of the acceptance. However, if a paper form is filed, there is no letter or acknowledgement of acceptance.
If you anticipate that you will owe the IRS, your taxes must be paid in full by March 15, otherwise, the IRS will calculate penalties and interest on your outstanding balance, despite a timely filed Form 4868. If you think you owe, but CANNOT pay the tax in full, by all means still file an extension! This will avoid the late filing penalty, which can be assessed in addition to a failure to pay penalty.
If you have questions or concerns about your tax filing status, deadline or penalties or interest, contact us.
