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As a small business, partnership firm, or an entrepreneur, you may have many demanding priorities. What happens if you’ve missed an IRS tax-filing deadline? Besides receiving a notice from the IRS, you likely will face penalties. However, you shouldn’t panic if you have forgotten to file. Discover some steps you can take once you’ve realized you’ve missed the deadline.
Missing the tax-filing or payment deadline can be scary enough, but you don’t want to worsen the problem. Rather than handling the matter yourself, contact a CPA or a tax attorney to seek professional advice. Tax professionals can help you with your tax situation. They understand the specifics of delays in returns and can help you minimize your losses. An experienced CPA or a tax attorney can also help with reducing or appealing any penalties you may face.
Request a Tax Filing Extension
The IRS allows an extension in legitimate cases. Apart from individuals, the IRS grants extensions to S and C class corporations, LLP companies, nonprofit organizations, and partnerships. In addition, you can file your extension form with the IRS electronically. For individuals, Form 4868 is applicable. Businesses and corporations need to file Form 7004 or Form 1138 to request an extension.
Note that the IRS permits a filing extension for filing the income tax return itself, not for paying taxes due. While you can be allowed extra time to file the return, you must pay your tax due within the original deadline. If you don’t have an exact calculation of taxes that you owe, you can pay an amount that approximates your estimated taxes due.
What Are the Penalties for Missing a Deadline?
Penalties for missing a deadline can be significant, and the interest you pay can be compounded. The more you delay in paying, the greater the penalty will be.
The IRS assesses the following two types of penalties:
- For late returns, the penalty is 5% of unpaid taxes per month or part of a month. The penalty period begins from the last date of filing returns, or from the last day of the extended period if it is granted. The base penalty amount is $205 or 100% of unpaid tax if that amount is less than $205.
- For those who do not pay taxes within the original or extended deadline, the penalty is typically 0.5% per month, or part of the month, of the unpaid tax amount.
If taxpayers default on both of the above grounds, they are liable to pay a maximum of 5% penalty per month, or part of the month, on the combined amounts.
A relief provision is available. If the IRS owes a refund to a taxpayer, the taxpayer would not face a penalty, even if the taxpayer files a return late.
If you have missed an IRS deadline, it is not the end of the road. Proper professional guidance can help you. From dealing amicably with the IRS to reducing your dues and penalties, tax professionals can be helpful resources for you.
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