e.g.  L-corporation discovers in February that it under-reported and under-paid employment taxes for the 4th quarter of the preceding year.  Since the error was discovered in February the amended return and tax is not due until April 30th.

However, Interest will be charged if you do not file the amended tax return AND pay the taxes by the due date.

NOTE: If you do not pay the taxes before the IRS asks for them, interest will be charged, therefore it is to your company’s advantage to report the error and pay the taxes when the mistake is discovered.

If you need help with this issue or any other, remember, small business services and taxation are our business.  Please give Art & Business Consulting a call.  We would love to engage you as a client.

The usual disclaimers: Although ABC has made every effort to insure the accuracy of Taxes, Tips and Tools, misinformation, disinformation, changes, mistakes, typos and hackers happen, therefore Art & Business Consulting LLC takes no responsibility for any action taken or results based on the information supplied here in.  Internal Revenue Service Circular 230 Disclosure:  As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement address herein.  Art & Business Consulting LLC currently does not have a certified public accountant or an attorney on staff; this information is purely for educational purposes and not to be construed as legal or financial advice.  Art & Business Consulting LLC and its employees, members and associates are not engage to practice law; you always should discuss legal matters with your attorney before talking to anyone else.

The penalty may be abated it the partnership or S-corporation can show the failure to file time was due to a reasonable cause.  There are procedures to address these penalties assuming the entity is domestic, has a small number of partners or shareholders, and the individuals in question are natural persons who have reported all their income from the business with timely filed tax returns and this failure to file timely is not an ongoing problem.  If the partnership or S-corporation has made a habit of failing to file, do not expect penalty abatement.

Really, the easiest way to handle this issue is not to file late in the first place. For many S-corporations and Partnerships no tax is due; these forms are information returns that tell the individual partners and shareholders their distributive share of income and expenses.

• Partnership tax returns are due April 15 for calendar-year partnerships
• OR the 15 of the fourth month after the close of the fiscal year for fiscal-year partnerships,
• S-corporation tax returns for calendar-year S-corporations are due March 15
• OR the 15^th of the third month after the close of the fiscal year for fiscal-year S-corporations.
• If the 15^th falls on a weekend or bank holiday the due date is the next business day, therefore in 2010 the S-Corporation tax return is due March 15, 2010 for calendar-year S-corporations.

Like other tax returns a taxpayer can file a form to extend the time to file, but all taxes are due on the day the tax return is initially due, which means the partners or shareholders will have to estimate their tax liability including income from the S-corporation or Partnership without falling short in order to avoid the failure to pay penalty along with interest.  Form 7004 can be to file for the extension to file Form 1065 or Form 1120S. The Form 7004 must be filed on or before the original due date or the Form 1065 or Forms 1120S.

Form 7004 will give an automatic 6-month extension to file Form 1120S (S-corporation) returns, but will only grant a 5-month extension to file Form 1065 (Partnership) returns.  In 2010 all Forms 1065, and Forms 1120S for which an extension (Form 7004) was filed will be due September 15, 2010.

As always, small business services and taxation are our business.  If you need help completing your partnership tax return or S-corporation tax return or need help attempting to get your penalty abated, Please give Art & Business Consulting a call.  We would love to engage you as a client.

The usual disclaimers: Although ABC has made every effort to insure the accuracy of Taxes, Tips and Tools, misinformation, disinformation, changes, mistakes, typos and hackers happen, therefore Art & Business Consulting LLC takes no responsibility for any action taken or results based on the information supplied here in.  Internal Revenue Service Circular 230 Disclosure:  As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement address herein.  Art & Business Consulting LLC currently does not have a certified public accountant or an attorney on staff; this information is purely for educational purposes and not to be construed as legal or financial advice.  Art & Business Consulting LLC and its employees, members and associates are not engage to practice law; you always should discuss legal matters with your attorney before talking to anyone else.