The IRS takes its tax filing deadlines very seriously. If you missed the corporate tax filing deadline, that can lead to hefty penalties. But missing a deadline is not the cause of immediate panic. It happens. Actually, it happens to more than 7 million Americans every year.
What is the deadline to file corporate taxes?
Filing corporate taxes on time and accurately is essential for any successful business. Taxes can be a significant expense for businesses, and late filing and incorrect information can lead to hefty fines from the IRS.
Taxpayers are subject to different tax filing deadlines based on the type of business entity they own. Typically, S corporations and partnerships are due in March, while C corporations and sole proprietorships are due in April.
What happens if I missed the corporate tax filing deadline?
If you know you won’t be able to file a tax return on time, you should file an extension. Filing for an extension will give you up to six more months to complete your tax return. But be aware: filing an extension does not extend the length of time you have to pay your taxes. It only extends the length of time you have to file. You must still pay your estimated taxes by the original due date.
Failing to file your taxes by the deadline and neglecting to file for an extension can result in accumulating interest and penalties. You will face penalties for both failing-to-file and failing-to-pay. You will be subjected to both penalties if you have not paid your entire tax liability by the deadline.
The penalty for not filing a return or an extension by the deadline is 5% of the unpaid tax for each month the return is late. And the penalty for not paying owed tax on time is 0.5% of the outstanding tax amount for each month it remains unpaid.
In addition to the penalties, the IRS imposes interest charges based on federal interest rates. Interest is assessed daily for each day that you are late in paying your taxes, and it is calculated based on the total amount of tax owed, including any penalties that have accrued.
After that, the IRS will initiate its collections process by issuing a Notice of Federal Tax Lien. This document alerts creditors that the government has established a legal claim over your assets, including real estate, personal property, and bank accounts.
How can I prevent this in the future?
Always file your tax return, even if you think you can’t pay the total taxes you owe. After all, the penalty for failing to file is significantly higher than for not paying.
If you missed the corporate tax filing deadline, don’t let it stop you in your tracks. If you need help communicating with the IRS or establishing a payment plan, Boris Benic and Associates can help. We aim to assist you in getting back on track and ensuring this situation does not occur again next year.