Important tip!!!

For certain corporations affected by federally declared disasters such as hurricanes, the due dates for filing returns, paying taxes, and performing other time-sensitive acts may be extended. The IRS may also forgive the interest and penalties on any underpaid tax for the length of any extension. For more information, visit IRS.gov/DisasterTaxRelief

 Who must file.

Unless exempt under section 501 of the Internal Revenue Code, all domestic corporations in existence for any part of a tax year (including corporations in bankruptcy) must file an income tax return whether or not they have taxable income.

A domestic entity electing to be classified as an association taxable as a corporation must generally file Form 1120, U.S. Corporation Income Tax Return, to report its income, gains, losses, deductions, credits, and to figure its income tax liability. Certain organizations and entities must, or may elect to, file special returns. For more information, see Special Returns for Certain Organizations in the Instructions for Form 1120.

When to file.

 Generally, a corporation must file its income tax return by the 15th day of the 4th month after the end of its tax year.

1. A new corporation filing a short-period return must generally file by the 15th day of the 4th month after the short period ends.
2. A corporation that has dissolved must generally file by the 15th day of the 4th month after the date it dissolved.
3. However, a corporation with a fiscal tax year ending June 30 must file by the 15th day of the 3rd month after the end of its tax year.
4. A corporation with a short tax year ending anytime in June will be treated as if the short period ended June 30 and must file by the 15th day of the 3rd month after the end of its tax year.
5. If the due date falls on a Saturday, Sunday, or legal holiday, the due date is extended to the next business day.

 

Extension of time for file

File Form 7004, “Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns”, to request an extension of time to file.

1. The IRS will grant the extension if the corporation completes the form properly, files it, and pays any tax due by the original due date for the return.
2. Form 7004 does not extend the time for paying the tax due on the return.
3. Interest, and possibly penalties, will be charged on any part of the final tax due not shown as a balance due on Form 7004.
4. The interest is figured from the original due date of the return to the date of payment. For more information, see the Instructions for Form 7004.
5. How to pay your taxes. A corporation must pay its tax due in full no later than the due date for filing its tax return (not including extensions).

 

Estimated Tax Payments

Generally, the following rules apply to the cooperative’s payments of estimated tax.

•     The cooperative must make installment payments of estimated tax if it expects its total tax for the year (less applicable credits) to be $500 or more.
•     The installments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. If any due date falls on a Saturday, Sunday, or legal holiday, the payment of the installment is due on the next regular business day.
•     The cooperative must use electronic funds transfer to make installment payments of estimated tax.
•     If, after the cooperative figures and deposits estimated tax, it finds that its tax liability for the year will be more or less than originally estimated, it may have to refigure its required installments. If earlier installments were underpaid, the cooperative may owe a penalty.
•     If the cooperative overpaid estimated tax, it may be able to get a quick refund by filing Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax. See the instructions for lines 30b and 30c.

Estimated tax underpayment penalty

1.     If the corporation does not pay a required installment of estimated tax by its due date, it may be subject to a penalty.
2.     The penalty is figured separately for each installment due date. Therefore, the corporation may owe a penalty for an earlier due date, even if it paid enough tax later to make up the underpayment.

III.     This is true even if the corporation is due a refund when its return is filed.

 

Use Form 2220, “Underpayment of Estimated Tax by Corporations”, to see if the cooperative owes a penalty and to figure the amount of the penalty.

Estimated tax penalty.

A cooperative that does not make estimated tax payments when due may be subject to an underpayment penalty for the period of underpayment. Generally, a cooperative is subject to the penalty if its tax liability is $500 or more and it did not timely pay at least the smaller of:

•     Its tax liability for the current year, or
•     Its prior year’s tax.

If the cooperative receives a notice about penalties after it files its return, send the IRS an explanation and they will determine if the cooperative meets reasonable cause criteria. Do not attach an explanation when the cooperative’s return is filed.

Interest.

o   Interest is charged on taxes paid late even if an extension of time to file is granted.

o   Interest is also charged on penalties imposed for failure to file, negligence, fraud, substantial valuation misstatements, substantial understatements of tax, and reportable transaction understatements from the due date (including extensions) to the date of payment.

Late filing of return.

• A cooperative that does not file its tax return by the due date, including extensions, may be penalized 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax.
• The minimum penalty for a tax return required to be filed in 2024 that is over 60 days late is the smaller of the tax due or $485.
• The penalty will not be imposed if the cooperative can show that the failure to file on time was due to reasonable cause. See Caution, earlier.