Irs Business Tax Extension Form (2024)

If your corporation, partnership or estate operates on a calendar year basis the tax return is due March 15th which is coming up! If you need additional time to file tax returns for these entities file IRS Form 7004 which is an applicationfor Automatic Extension of Time To File CertainBusiness Income Tax, Information, and Other Returns.

Filing this form by March 15th gives you an additional 5 or 6 months to file your actual tax documents. Instructions for this form are essential so be sure to read them.

If you connect with me (or any tax practitioner worth their salt) to hit this deadline the first thing that you will be advised to do at this late date is to get this automatic extension request filed. If anything it alleviates the stress of rushing through the tax return AND you avoid the onerous late filing penalty.

There are many reasons why the IRS may chargepenaltieson your tax account. The IRS is legally required, under IRC § 6601(a), to charge interest when you fail to pay the full amount you owe on time. Interest may also accrue on penalties. Interest, and any applicable penalties, will continue to accrue until you pay your balance due in full. Here are some of the most common penalties, information on why they may have been charged, and how to request penalty abatement (removal) if applicable.

First let’s talk about some common penalty charges on individual accounts, along with interest, and why the IRS charges them.

Common penalties include:

• Failure to file– you didn’t file your tax return by the return due date or extended due date if an extension to file is requested and approved.
• Failure to pay– you didn’t pay the taxes reported on your tax return in full by the due date of the original tax return. An extension to file doesn’t extend the time to pay, so you must pay your taxes by the original due date of the tax return even if you have requested an extension of time to file your tax return. In addition, the IRS may charge a failure to pay penalty if the IRS sends a request for payment and you fail to pay on time.
• Failure to pay proper estimated tax– you didn’t pay enough taxes due for the year with yourquarterly estimated tax payments, or throughwithholding, when required.
• Bad check– your bank doesn’t honor your check or other form of payment.

Interest

The IRS is required to charge interest on any unpaid balance owed until it is paid in full. Learn more on theIRS’s Interest page,or view the latest interest rates.

How can I dispute IRS penalties?

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For more than thirty-seven years, Charles R. Levun and Michael J. Cohen have been presenting the preeminent seminars on flow-through taxation. The two flagship Tax Forum programs are Fundamentals of Flow-Through® and Tax Planning Forum®. Tax Forum is expanding its programs to include self-study (on-demand) training, as well as working on an additional course, which they will share with us soon.

Please read through Part 2 of this special interview, featuring Chuck Levun and Michael Cohen. Part 1is focused on Tax Forum, its flow-through tax planning training programs, and the importance of education for CPAs, attorneys and other tax planning professionals.

To get a sense of how the Tax Forum programs are unique in the partnership, LLC and S Corporation tax training space, please register for Tax Forum’s complimentary webinar:

Avoiding Costly Mistakes: Four Essential Tax Conceptsfor the Non-Tax Business Attorney or CPA taking place on Thursday, May 16th at Noon CDT

Kat Jennings’ Question: Let’s jump right in…Do you see an increase in controversy in partnership taxation? Why or why not?

Michael Cohen’s Answer: For the most part, not yet. However, with the new budget for the IRS and the commitment to go after “large” partnerships, I would think that controversy will increase. However, for this commitment to be successful in shutting down “abusive” transactions, the partnership knowledge base of the IRS auditors will need to be expanded. I will note that virtually every year we have at least a half dozen IRS professionals attend either our Forum or Fundamentals courses.

Kat Jennings’ Question: What is the biggest challenge for partnerships going forward?

Chuck Levun’s Answer: Staying on top of developments is a biggie. There have been proposals floating around from Senator Wyden and others that would make substantive changes to some of the basic partnership principles. These changes are designed to hit perceived abuses of the partnership rules by large partnerships. Unfortunately, if enacted, they also would complicate life for the smaller partnerships, which are by far a large number of business entities and growing. Moreover, there are always new structuring techniques, new thought processes, etc. that are constantly being developed. Partnerships are such a dynamic area, given, as I said before, that partners have a tremendous amount of flexibility in structuring their transactions. It’s not like the S corporation arena where everything has to be shared on a pro rata basis, there can be only one class of stock, etc.

Kat Jennings’ Question: Tell us about any cases in partnership taxation that really surprised you.

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According to the information posted at the Illinois Policy Organization:

Illinois Gov. J.B. Pritzker will set another state record if his $52.7 billion budget for 2025 is passed. Hedescribed itas “tight” as well as “focused and disciplined.”

But it relies on $898 million in new taxes. It is nearly $13 billion more than the state budget when he took office.

So, yes, it’s focused and disciplined – as much as sailors on leave.

Here’s a look at the details, winners, losers and those who will be left wounded.

Revenue

Illinoisans should be most cautious of the call for massive tax hikes, $898 million to be exact, on corporations, retailers, sportsbooks and even individual taxpayers. While the governorspecifically singled outhis proposals to create a state-level child tax credit and eliminate the state’s grocery tax – revenue that goesentirelyto local governments – in his address Feb. 21, he failed to mention that in total his series of proposals would substantially raise taxes for Illinoisans.

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MostU.S. citizensandpermanent residentswho work in the United States need to file a tax return if they make more than a certain amount for the year.

The IRS has a variety of information available on IRS.gov to help taxpayers, including aspecial free helppage. Here are some specific details to help people if they need to file a tax return.

Factors That Affect Whether Someone Needs To File A Tax Return

Here are some of the things that affect whether someone must file a tax return.

Gross income.Gross income means all income a person received in the form of money, goods, property and services that aren’t exempt from tax. This includes any income from sources outside the United States or from the sale of a main home, even if you can exclude part or all of it.

Required filing threshold.People need to see if their gross income is over the required filing threshold.Filing statuseshave different income thresholds, so individuals may need to consider their potential filing status as well.

There are five filing statuses:

• Single
• Head of household
• Married filing jointly
• Married filing separate
• Qualifying surviving spouse

Find details on tax filing requirements withPublication 501, Dependents, Standard Deduction, and Filing Information.

Tax Year 2023 Filing Thresholds By Filing Status

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The Internal Revenue Service reminds taxpayers they’re generally required to report all earned income on their tax return, including income earned from digital asset transactions, the gig economy and service industry as well as income from foreign sources.

Reporting requirements for these sources of income and others are outlined in theInstructions for Form 1040 and Form 1040-SR. The information is also available on IRS.gov.

This release is the third in a four-part series called theTax Time Guide, a resource to help taxpayers file an accurate tax return. Additional guidance is available inPublication 17, Your Federal Income Tax (For Individuals).

Digital Assets, Including Cryptocurrency

A digital asset is a digital representation of value that is recorded on a cryptographically secured, distributed ledger. Common digital assets include:

• Convertible virtual currency and cryptocurrency.
• Stablecoins.
• Non-fungible tokens (NFTs).

Everyone Must Answer The Question

Everyone who files Forms 1040, 1040-SR, 1040-NR, 1041, 1065, 1120 and 1120-S must check one box answering either “Yes” or “No” to the digital asset question. The question must be answered by all taxpayers, not just by those who engaged in a transaction involving digital assets in 2023.

Checking “Yes”: Normally, a taxpayer must check the “Yes” box if they:

• Received digital assets as payment for property or services provided;
• Transferred digital assets for free (without receiving any consideration) as a bona fide gift;
• Received digital assets resulting from a reward or award;
• Received new digital assets resulting from mining, staking and similar activities;
• Received digital assets resulting from a hard fork (a branching of a cryptocurrency’s blockchain that splits a single cryptocurrency into two);
• Disposed of digital assets in exchange for property or services;
• Disposed of a digital asset in exchange or trade for another digital asset;
• Sold a digital asset; or
• Otherwise disposed of any other financial interest in a digital asset.

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On July 24, the IRSannouncedthat it will immediately end most unannounced revenue officer (RO) visits.

For decades, IRS ROs have visited households and businesses as part of their efforts to collect federal tax liabilities. In a major policy change, the IRS has stopped most unannounced RO visits to taxpayers to reduce public confusion and enhance overall safety measures for both taxpayers and employees.

What is a Revenue Officer?

IRS ROs are unarmed civil employees whose duties include visiting households and businesses to help taxpayers resolve their account balances. Their job is to collect unpaid federal taxes and to secure past-due federal tax returns. ROs also educate taxpayers on their tax filing and paying obligations and provide guidance and service on a wide range of financial issues to help taxpayers resolve their tax issues. They also ensure taxpayers are aware of their rights under the Taxpayer Bill of Rights. The IRS currently has about 2,300 ROs working cases across the country.

How do Revenue Officers work?

ROs conduct interviews with taxpayers and/or their representatives as part of the process of collecting delinquent taxes and securing past-due tax returns. Through interviews and research, the ROs get and analyze financial information to determine taxpayers’ ability to pay their tax bill. ROs consider alternative means of resolving tax debt issues when taxpayers cannot pay the debt in full and provide taxpayers with resources that can help, including:

• Setting up payment agreements that allow taxpayers to pay their bills over time;
• When appropriate, granting relief from penalties imposed when tax bills are overdue; or
• Suspending collection of accounts due to financial hardship.

If the IRS is unable to reach an agreement with a taxpayer, enforcement actions may be taken. For more information about the IRS collection process, visit ourGet Helppage.

Why is the IRS stopping these unannounced visits?

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IRS: Update for Form 990-T, Form 1120-POL filers with upcoming deadlines; e-file unavailable for small number of organizations with earlier due dates

An extension can be filed for both forms or paper file with Form 1120-POL

The Internal Revenue Service alerted a limited group of tax exempt organizations that they won’t be able to electronically file Form 990-T, Exempt Organization Business Income Tax Return, orForm 1120-POL, U.S. Income Tax Return for Certain Political Organizations, until March 17, 2024.

IRS system upgrades mean e-filing of Forms 990-T and Forms 1120-POL (including returns on extension) with due dates from Jan. 15, 2024, to March 15, 2024, are currently unavailable.The IRS notes previous filing data show only about 2,000 Forms 990-T and 1120-POL were electronically filed during this time period, with the vast majority of those involving 990-T. Entities needing to file in this timeframe should follow the below instructions.

Taxpayers with due dates on April 15, 2024, and later will be able to e-file Forms 990-T and Forms 1120-POL on time.

Returns due from Jan. 15, 2024, to March 15, 2024:

• Form 990-T, Exempt Organization Business Income Tax Return
  A relatively small number of 990-T filers are affected by this.
  Organizations subject tounrelated business income tax (UBIT)are required by law to file Form 990-T electronically. An organization with a Form 990-T due from Jan.15, to March 15, 2024, should request an automatic six-month extension of time to file by submittingForm 8868, Application for Extension of Time To File an Exempt Organization Return, by the due date of the return. The IRS estimates only about 2,000 of the 200,000 Form 990-T filers have a due date in this time period and are affected by this.
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WASHINGTON – With tax season rapidly approaching, the IRS reminds employers that Jan. 31 is the deadline for submitting wage statements and forms for independent contractors with the government.

Employers must file their copies ofForm W-2, Wage and Tax Statement, andForm W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by Jan. 31.

The Jan. 31 deadline also applies toForms 1099-MISC, Miscellaneous Income, andForms 1099-NEC, Nonemployee Compensation, that are filed with the IRS to report non-employee compensation to independent contractors. Various other due dates related to Form 1099-MISC, Form 1099-K and Form 1099-NEC, including dates due to the IRS, can be found on the forms’instructions.

The IRS offers afree electronic filing service for the Form 1099 seriesusing the Information Returns Intake System (IRIS). Filers can also use this online portal to prepare payee copies for distribution, file corrections and request automatic extensions.

New Filing Requirements

New electronic filing requirements affect Forms W-2 that are required to be filed in 2024. Businesses that file 10 forms or more must file W-2s and certain information returns electronically. SeeNew electronic filing requirements for Forms W-2for more information.

E-filing is the quickest, most accurate and convenient way to file forms. For more information on e-filing Forms W-2, employers can refer toEmployer W-2 Filing Instructions & Informationon the Social Security Administration’s website.

Key Points To Remember

• Extensions to file are not automatically granted. Employers may request a 30-day extension to file Forms W-2 by submittingForm 8809, Application for Extension of Time to File Information Returns, by Jan. 31.
• Filing Form 8809 does not extend the due date for furnishing wage statements to employees. A separate extension must be filed by Jan. 31. SeeExtension of time to furnish Forms W-2 to employeesfor more information.
• Filing by the deadline helps the IRS to fight fraud by making it easier to verify income. Employers can help support that process and avoid penalties by filing the forms on time and without errors.
• Penalties may be assessed for failure to file correctly and on time. For more information visit the IRS’Information Return Penaltiespage.
• Form 1099-K $600 reporting threshold delayed. This means that for 2023 and prior years, payment apps and online marketplaces are only required to send out Forms 1099-K to taxpayers who receive over $20,000 and have over 200 transactions. For tax year 2024, the IRS plans for a threshold of $5,000 to phase in reporting requirements.

The IRS encourages employers and taxpayers to visitAbout Form W-2, Wage and Tax StatementandPublication 1220, Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2GPDF, for more information.

IR-2024-06

As the year 2024 approaches, individuals and businesses need to be aware of the upcoming tax changes that will impact their financial planning. From adjustments in tax rates to updates indeductions and credits,understanding these changes can help taxpayers prepare and make informed decisions.

In this overview, we will discuss the key tax changes that will take effect in 2024, providing insights into how these revisions may affect your tax liability and overall financial situation. Stay informed and stay ahead of the game by keeping up with the latest developments in tax laws and regulations.

KEY TAKEAWAYS: 2024 US EXPAT TAX UPDATES

• Tax Deadlines: The standard filing deadline for US residents is April 15, 2024, but expats get an automatic extension toJune 17, 2024.
• FBAR and FATCA Reporting: International taxpayers with foreign accounts get an automatic extension to October 15, 2024, tofile their FBARs.FATCA reporting is tied to your individual tax return deadline.
• Foreign Earned Income Exclusion: TheFEIEfor 2024 is increased to $126,500, aiding American citizens in managing their worldwide income more effectively.
• Standard Deduction Increases: The standard deduction for various filing statuses has increased for 2024, impacting both passive and unearned income reporting.
• Stimulus Checks and Compliance: US expats who haven’t claimed theirstimulus paymentsfor tax years 2020-2022 can still do so. Additionally, those who are behind on their tax filings can use the IRSamnesty programto become compliant without facing penalties.

WHEN DOES THE 2024 US TAX FILING SEASON START?

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When Section 1202 was enacted in 1993, a 50% gain exclusion applicable to the sale of qualified small business stock (QSBS), with the remaining 50% of the gain taxed at a 28% rate.[1] Not surprisingly, operating as business through a C corporation for the purpose of qualifying for Section 1202’s gain exclusion was not particularly attractive for most businesses. After Congress increased the gain exclusion to 75% for QSBS issued after February 17, 2009, and then 100% for QSBS issued after September 27, 2010, qualifying for Section 1202’s gain exclusion became a viable planning goal. In most cases, determining the applicable exclusion percentage is a straightforward exercise. But as discussed below, there are a couple of factors that can complicate this determination.

This is one in a series of articles and blogs addressing planning issues relating to QSBS and the workings of Sections 1202 and 1045. During the past several years, there has been an increase in the use of C corporations as the start-up entity of choice. Much of this interest can be attributed to the reduction in the federal corporate income rate from 35% to 21%, but savvy founders and investors have also focused on qualifying for Section 1202’s generous gain exclusion.  Legislation proposed during 2021 sought to curb Section 1202’s benefits, but that legislation, along with the balance of President Biden’s Build Back Better bill, has stalled in Congress, perhaps permanently. More background information regarding qualified small business stock (QSBS) and the workings of Sections 1202 and 1045 of the Internal Revenue Code is available on our website.
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