While most of America thinks of April 15th as the only tax deadline in existence, there are other deadlines which can have an equally devastating impact, if you fail to file in a timely manner.
March 15, 2021 is the tax deadline for calendar year ending S- Corporations, Limited Liability Companies (LLC) taxed as S- Corporations and Partnerships. If your business is an S- Corporation you will need to file Internal Revenue Service (IRS) Form 1120-S. If your business is an LLC taxed as an S- Corporation, you will also need to file IRS Form 1120-S. However, if your business is a partnership you will need to file IRS Form 1065. It is important to note that if you are a single member LLC taxed as a sole proprietorship or a solo member LLC taxed as a disregarded entity, your filing deadline is April 15, 2021.
If You Are Unable to Comply with the Filing Deadline
If you are unable to file your business tax return by the deadline, then you must file an extension. To file an extension, use IRS Form 7004 for federal returns. If your state requires a corporation or partnership return, check with them to determine which extension form if required.
Consequences If You Don’t File
When you fail to file a Form 1120-S by the deadline, the corporation is charged a monthly penalty that’s equal to 5 percent of any income tax that remains unpaid. Moreover, the corporation will reach the maximum 25 percent penalty after the fifth month that the return remains unfiled. Even if the corporation wouldn’t have reported any taxable income had the return been filed, the IRS will still charge a penalty of $100 once the return is more than 60 days late.
More Than Five Months Late
Finally, even if you’re more than five months late filing the corporate return, the corporation can continue to accrue additional penalties. In addition to the penalties for failing to file, the IRS can charge the corporation a separate penalty for paying taxes after the filing deadline. This penalty will increase the amount of tax that the corporation owes by one-half of a percent for each month it remains unpaid. However, since the two penalties accrue at the same time, the IRS does reduce the late-filing penalty by the amount of late-payment penalties that accrue during the same initial five months. Therefore, if the corporation owes tax with the unfiled return, the business may end up paying up to 47.5 percent in combined penalties. The IRS will also charge interest on the corporation’s unpaid tax and penalties until everything is paid off. The moral of the story is to file an extension and avoid tax troubles.