Penalty Proof You Small Business When Filing for IRS Tax Extensions

The filing deadlines, regarding the 2008 tax year, for small businesses are as follows:

April 15, 2009 for sole proprietors that are reported on a Schedule C or Form 1040
April 15, 2009 for LLCs and Partnerships
March 15, 2009 for corporations that file Form 1120 or 1120S

If you need to file for an extension, keep in mind that an extension of time to file is NOT an extension of time to pay. However, filing an extension on time can help you save money and avoid hefty penalties, which generally accrue at 5% of the total tax liability up to a maximum (5 months) of 25%.

Add to that interest and the failure to pay penalty and your total liability can easily double (increase by 100%) if you have failed to file for a few years and owe tax for each year.  If you don’t owe any tax and are late in filing, the failure to file penalty does not apply.

When filing for an extension, it is important to avoid underpaying your taxes. If you are forced to file an extension (due to not having all your information organized) you must send a check with the extension (less what you withheld or paid in through estimated quarterly taxes in 2008) equal to 100% of your total tax liability for 2007 to be (underpayment of tax penalty) “penalty” proof.

You may also “penalty” proof yourself by paying in 90% of what you think you are going to owe for 2008.

Even if you haven’t filed your federal income tax return for this year or previous years, it is crucial that you file your tax return as soon as possible. If you are not sure whether you are required to file a return or how to deal with payroll tax problems, consult an experienced tax resolution specialist for help. If you cannot pay all of the tax due on your return, you may be able to qualify for an IRS payment plan.

Our team of expert tax attorneys, enrolled agents, and CPA’s can help relieve your of your tax troubles. Call us at 866-IRS-Problems for your free tax relief consultation.

The IRS web site also has some useful tax information for small businesses.

More Tax Help, IRS News and Tax Relief Tips:

  1. There’s Still Hope if You Didn’t File Your Taxes: You Can Still Get Income Tax Relief and Avoid IRS Penalties
  2. 5 Reasons to File Delinquent Tax Returns: There’s Still Hope if You Haven’t Paid Your Taxes This Year
  3. General Motors Pending Bankruptcy – Tax Help Available for GM and Chrysler Employees with IRS Debt
  4. Release Your IRS Bank Levy: How a Tax Attorney or Certified Tax Resolution Specialist Can Give You an Advantage

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3 Responses to “Penalty Proof You Small Business When Filing for IRS Tax Extensions”

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