I understand that the IRS grants an extension to a person who files a 4868 (personal income tax extension of time to file) - EVEN IF THEY DO NOT PAY THEIR TAX DUE BY APRIL 15th.

However, many states will make an extension invalid if the taxpayer does not pay the tax due by the deadline. In that case, the taxpayer will also incur a failure to file penalty (on top of their failure to pay penalty) since the extension is invalid.

I am wondering about a C Corp... If they filed an extension, and properly estimated their tax due, but they did not pay in the tax by the deadline, will their extension still be valid? Or will they incur a failure to file penalty?

Please help ASAP since I am not sure if my C Corp client can go on extension since they do not have the money to pay the tax due. I may need to just file a c corp return, and then amend it in order to avoid late filing penalties.

Thank you!

I understand that the IRS grants an extension to a person who files a 4868 (personal income tax extension of time to file) - EVEN IF THEY DO NOT PAY THEIR TAX DUE BY APRIL 15th. ====>No they must pay tax due by apr 15th even if they file form 4868; Filing an extension is only an extension of time to gather information. There is no extension of time to pay taxes. All individual taxes due must be paid by April 15th to avoid penalties and interest.

However, many states will make an extension invalid if the taxpayer does not pay the tax due by the deadline. In that case, the taxpayer will also incur a failure to file penalty (on top of their failure to pay penalty) since the extension is invalid.=>correct as mentioned above; however, they will not make an extension invalid.

I am wondering about a C Corp... If they filed an extension, and properly estimated their tax due, but they did not pay in the tax by the deadline, will their extension still be valid? Or will they incur a failure to file penalty?==> You are not obligated to make a tax payment when you file for your tax extension. But keep in mind that if you have a tax balance due when you file, penalties, late fees, and/or interest charges may be assessed if you do not pay the amount owed by the original filing deadline. As said still valid, but they incur a failure to file/to pay penalties interest. extensions don't give you extra time to pay taxes. Taxes are due on the original due date of the return, not including extensions. If you don't pay at least 90% of the amount you owe, you might also be subject to a late payment penalty. The penalty is usually half of 1% of the amount owed for each month, up to a maximum of 25%.
If you don't file either your return or Form 7004 by Mar 15, you'll be subject to a late filing penalty. The penalty is 5% of the amount you owe for each month, up to a maximum of 25%.so, If you incorporated as a C-corp, your tax return is due by the 15th day of the third month of its tax year. The IRS penalty is equal to 5%of the unpaid tax amount for each month or portion of a month the taxes remain unpaid. For example, if the corp?s tax is $3K and you are filing 3 months late, multiple $3k by 5% times 3 months to get your late filing penalty of $450. The maximum IRS-imposed penalty is 25% of the unpaid tax.


Please help ASAP since I am not sure if my C Corp client can go on extension since they do not have the money to pay the tax due. I may need to just file a c corp return, and then amend it in order to avoid late filing penalties.==>As mentioned above;for your state corp return, you need to contact the dept of revenue of your home state for more accurate info; Many states will automatically grant a state tax extension when your Federal tax extension is approved.