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Tuesday, April 5, 2011

How to file a business tax extension with the IRS

In 2006, the United States Internal Revenue Service amended its policy to simplify the extension filing procedures for businesses seeking to file after the formal tax filing deadline for annual tax forms (irs.gov). The extension allows businesses to postpone formal filing for up to 6 months from the last possible filing date for businesses.
Business tax filing extensions intially last from 5 to 6 months
The Internal Revenue Service seal
Tax filing extensions do not extend tax payment

To qualify for an extension of filing, all a business need do is complete an IRS form 7004. IRS form 7004 is not the only type of extension form, as tax payments deferral requires additional documentation, such as via IRS form 1138. Furthermore, in regard to employee retirement plan reporting, a separate IRS form 5558 is required for extension up to 2.5 months.

• Form 7004: Extension for filing tax documentation with the IRS 
• Form 1138: Extension for business payment of taxes 
• Form 5558: Extension for filing employee plan distributions

Filed IRS Forms 7004 grant either 5 month or 6 month filing extensions, depending on the type of business. Partnerships, Estates and Trusts may only qualify for the 5 month extension, while a host of other business types may qualify for the 6 month extension. When filing for an extension, the only completed form that needs to be sent to the Internal Revenue Service is the form 7004. According to the IRS, taxes due from a business, and/or interest on tax due is still incurred, whether it be retroactively or otherwise, regardless of the tax filing extension. As stated above, the payment of said taxes may be deferred by using IRS form 1138. Details surrounding the filing of IRS Form 7004 are clarified below:

Steps for filing a tax extension with the IRS

To illustrate how a business would go about filing for an extension with the IRS, the following steps may be helpful. Since tax filing involves a lot of financial records, obtaining quarterly reports, financial statements, and tax deductions such as contributions to retirement plans and other tax deductible items, an extension may be required to properly gather, record and submit tax documentation. On IRS form 7004, no reason is needed for filing the extension. The services of an accountant, tax specialist or tax attorney may be beneficial in some situations.

Step 1: Gather relevant tax documents, ex-financial statements, withholdings, and retirement plan contributions
Step 2: Place all pertinent documentation and forms into a folder and/or computer file for later use
Step 3: Identify business structure: ex-sole proprietorship, C-Corporation, LLC etc.
Step 4: Acquire and complete IRS form 7004, then mail to appropriate IRS tax service center.
Step 5: Calculate probable tax due and/or potential interest payments on the deferred tax filing.
Step 6: Submit form 7004 and/or any other necessary tax filing extension forms. Send payments and any relevant payment deferral forms to the IRS.

Since companies often have different tax situations, bookkeeping systems and other financial recordkeeping, it is important to identify what can be deducted from company income to ensure the business doesn't overpay taxes. Doing so may take time, hence the need for the extension. Tax filing extensions may be needed for a number of purposes.

Filing for a business tax filing extension with the United States Internal Revenue Service is fairly simple in comparison to the actual filing of annual tax documents. Essentially, all that is needed is a form 7004, however, depending on the businesses situation, other forms may also be needed such as forms 1138 and 5558. When in doubt, contacting the U.S. Internal Revenue Service businesses or corporate division may be helpful. 

IRS tax centers are located throughout the country and can be located through the linked map. Additional assistance from tax specialists, tax accountants and/or attorneys may be necessary in some situations. Keeping paperwork, financial records and bookkeeping systems organized can be helpful in the time following an extension as ultimately, tax filing should be accurately reported. This article has illustrated ways businesses can file for tax filing extension with the U.S. Internal Revenue Service by pointing out paperwork requirements, in addition to steps that may be involved when filing for extension.


1. http://www.irs.gov/newsroom/article/0,id=154554,00.html
2. http://www.irs.gov/pub/irs-pdf/f1138.pdf http://www.irs.gov/pub/irs-pdf/f5558.pdf
3. http://www.irs.gov/pub/irs-pdf/f7004.pdf
4. http://www.irs.gov/pub/irs-pdf/i7004.pdf
5. http://www.irs.gov/formspubs/article/0,id=98155,00.html


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