Home » BUSINESS » CORPORATE TAX » Extend The Due Date To Pay Your Corporate Income Taxes – A Good Reminder From a Past Post

Extend The Due Date To Pay Your Corporate Income Taxes – A Good Reminder From a Past Post

Now is a good time to remind corporations to conserve cash flow if possible.  If you expect to have a net operating loss in 2010 but have taxable income in 2009, here is an opportunity to extend the due date of  the amount due with your 2009 corporate tax return.  This is another good post from the past.
 
By Stacie Clifford Kitts, CPA
 

Do you have a profit in the current year, but because of certain economic conditions, or other factors you expect to have a net operating loss next year?

If the answer is yes, you may be able to delay payment of your corporate income taxes.

Yes – Really, you can delay payment of corporate income taxes if the right conditions exist.

Generally, if you request an extension of time to file your tax return, you are extending the due date of the return, but not the due date for paying your income tax. As corporate tax payers know, their income taxes are due in full by the 15th day of the third month following the corporation’s year-end.

However, you may be able to extend the due date for paying your corporate income taxes by filing Form 1138 Extension of Time for Payment of Taxes by a Corporation Expecting A Net Operating Loss Carry back.

In order to take advantage of this extension of time to pay your tax, you must also extend the due date of your corporate income tax return using Form 7004 Application for Automatic Extension of Time to File Certain Business Income Tax. Payment is delayed [and therefore not deposited with Form 7004] because taxes that normally would be deposited will be reduced or possibly eliminated by the carry back of the net operating loss from the following year.

File the Form 1138 after the beginning of the tax year where you expect a net operating loss, but before the original due date of the tax return.

The extension for payment is in effect until the return for which the extension is requested is due to be filed – including extensions.

Note: Not all payments are extended. If you were required to make estimated payments throughout the year, these will most likely not be extended. Only payments that would be due after you file Form 1138 are extended.


2 Comments

  1. Wes Masters says:

    One thing to add about corporate tax extensions: your best option is to file an extension online. That way you’re guaranteed to get a response from the IRS and can re-file if your request was rejected. If, on the other hand, you choose to send the IRS your request through the mail, you will never hear anything. That means it may never get to the IRS or it could be rejected. That will mean you’re accumulating late filing penalties without even knowing it.

  2. Wes
    Thanks for the comment. I do agree with the electronic filing in that I like the ease of it. However, I have to make one clarification to your statement about penalties and a paper filed extension. If you paper file an extension you are not subject to penalties as long as you have proof of mailing on time..so be sure to keep a copy of your certified mail receipt. There really is no danger in filing a paper extension as long as you keep good records and send it certified.

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