Tax Tip: Filing and Paying Taxes are Two Separate Obligations
When a tax return is filed and taxes are paid it can appear to be one process. However, the rules of the IRS dictate that these are actually two, very distinct obligations that have to be fulfilled. First, taxes are due to be paid on April 15th. There is NO EXTENSION FOR PAYING TAXES. An extension is only an extension of time to file the return. Additionally, a tax return is required on the due date regardless if there is an amount owed, refund, or no tax due. Even S corporations and partnerships, which usually do not pay taxes, can have penalties assessed for not timely filing a tax return. Therefore, the penalty structure and requirement are completely independent. You can have a penalty for not paying taxes by April 15th even if you file an extension, and for some returns, even if no tax is due you can have a penalty for not filing a return.
The practical application of this is to make sure you pay your taxes by April 15th, or have a tax professional calculate if you have paid a sufficient amount to meet one of the IRS safe harbors. The IRS does allow safe harbor payments by April 15th based on prior year taxes for taxpayers that don’t yet have an accurate estimate of what they will owe. Next, April 15th is a hard deadline for an extension and October 15th is a hard deadline for the return (3/15 and 9/15 for corporations and 4/15 and 9/15 for partnerships). Your return/extension has to be filed by these deadlines no matter what the underlying tax situation.
If you have penalties or issues with tax balances contact us at Hone Maxwell LLP today for an assessment of your options. The key is to not simply provide a quick fix to get the IRS off your back, but to find a long-term remedy that is manageable based on your finances, and also address the underlying issue so that it does not happen again. For more tax updates and the latest news you can follow us on twitter @HMLLPTax or facebook at www.facebook.com/HoneMaxwellLLP.