Doom’s Day

Today, September 15, 2010, is the final deadline to file corporate tax returns if an extension was requested. If you haven’t gotten the work in to your local CPA or begun work on the return yourself, you’re looking to perhaps pay some penalties and interest.

If you have a balance due on a late tax return, the Internal Revenue Service will calculate further penalties and interest. Here’s what to look out for:

Failure to File Penalty

If you do not file your return by the due date, with or without an extension, you may be stuck with a failure to file penalty. The penalty is 5% of the tax not paid by the due date for each month or part of a month that the return is late. If your return is more than sixty days late, the penalty will be the lesser of $100 or 100% of the balance due. If you can show reasonable cause as to why the return was filed late, you will not have to pay.

Failure to Pay Penalty

This penalty is pretty self explanatory. Until the full balance is paid on the return, there will be a 0.05% penalty for each month the balance is not paid in full. There is no limit on the failure to pay penalty.

Interest

Generally speaking, the IRS will waive some penalties but will be VERY hesitant to waive any interest fees. Interest rates are set quarterly and are calculated based on how much tax you owe. The underpayment tax is currently 4% per year.

Prepare yourself for tax season and its deadlines. If you feel like you cannot make the deadlines, file an extension. Remember it is ALWAYS beneficial to file sooner than later.