The business tax extension deadline is just two weeks away, on September 15^th. While six months might have seemed like plenty of additional time to file your business tax return when you first filed for that extension, it’s not uncommon for time to get away from you. If you still haven’t filed your business tax return for 2021, it’s extremely important that you do so within the next two weeks so that your tax return is not late. If you miss the extended deadline, another extension is not possible, and you will have fees and penalties. Keep reading to learn more about the possible consequences of missing the tax extension deadline for your business.

Types of Penalties

Typically, the IRS will enforce four different types of penalties on late tax returns. These include the following:

1. Late payment penalties: It’s important to remember that you should have submitted an estimated payment amount to the IRS when you filed your request for an extension. If you did not do so, and your business owes taxes, you will be on the hook for late payment penalties in addition to penalties for late filing. If you made an estimated payment, but it wasn’t sufficient, you may face a late payment penalty based on the amount you still owe.

2. Underpayment of estimated tax penalties: These penalties can occur in addition to late payment penalties, and are typically applied to accounts that should have been making estimated quarterly tax payments, which is a common requirement for businesses.

3. Late filing penalties: Even if you paid the correct amount in taxes when you filed for an extension, missing the extension deadline can still leave you facing fees and paying even more money to the IRS.

4. Interest payments: On top of the fees and penalties listed above, the IRS will add interest on any unpaid taxes you owe. Interest will accumulate the longer that amount goes unpaid.

While you might think that paying your taxes back in March will eliminate any concerns regarding fees and penalties for missing the extension deadline, this couldn’t be farther from the truth. As you can see, there are many different penalties that can be applied to your account if you fail to file before September 15^th.

Penalty Amounts Vary by Entity Type

Just how much will you owe if you file your return late? That will actually vary depending on your business’s corporate entity. For example, partnerships are penalized $195 per month (or portion of a month) for each partner in the business, for a maximum of 12 months. S Corps are fined at the same rate, but the fee is applied for each shareholder in the business, rather than each partner.

For example, let’s say your S Corp has a total of nine shareholders, and you file return just two months late. That two-month delay will cost you $3,510 in late filing penalties alone, in addition to any other fees or interest you might owe if the payment you made earlier this year didn’t cover your entire tax liability.

C Corps, on the other hand, are charged a late filing fee equal to 5% of the unpaid tax amount for each month or part of a month that the taxes remain unpaid, up to 25% of the unpaid taxes. In these cases, filing late might not cost you much, if your estimated payment earlier in the year was accurate. However, if you’re off even by a small amount, you can owe a significant amount in penalties if you miss the extension deadline.

It’s also worth noting that all partnerships and S Corps must submit a Schedule K-1 for each partner or shareholder in the business on time, with no exception or extensions. If you believed your request for an extension deadline extended your K-1 deadline as well, unfortunately, you will be facing a fine of $260 for each K-1 that was not submitted to the IRS before the appropriate date.

File on Time to Avoid Unnecessary Penalties

There is still time to ensure that your business doesn’t have to pay additional fees and penalties. Contact Camputaro & Associates today to schedule a consultation with one of our business tax experts. We’ll sit down with you to go over your business tax return and determine what other documents or information we need to get your return filed on time. Call now to book an appointment and get your business tax return filed before September 15^th!