How to Apply for a Tax Extension for an S Corporation

by Jeff Franco

    Despite the fact that an S corporation doesn’t pay income tax on most types of earnings, the IRS and many state tax agencies still require S corporations to file annual income tax returns. However, if you are responsible for preparing an S corporation’s tax return, but don’t think you’ll be able to file it by the due date, you can always apply for an extension to file.

    Step 1

    Calculate the amount of tax that the S corporation owes. An S corporation only pays tax on certain built-in gains and passive income, while shareholders are responsible for paying the tax on all other corporate income.

    Step 2

    Obtain a copy of Form 7004 from the IRS website. Form 7004 is the application that an S corporation must file to receive an automatic 6-month extension to file its tax return.

    Step 3

    Fill out Form 7004 through Part II. Enter the S corporation’s name, address and employer identification number, or EIN, at the top of the form. Skip Part I and enter “25” as the form code in Part II, which corresponds to Form 1120S – the tax return form for S corporations. Answer the remaining two questions in Part II.

    Step 4

    Fill out Part III of Form 7004. Unless the S corporation maintains its books and records outside the United States and Puerto Rico, earns most of its income from U.S. possessions, or is a foreign corporation with a place of business in the United States, skip the first question of Part III. For the remaining questions, enter the tax year and the estimate of tax, if any, that the S corporation owes.

    Step 5

    File Form 7004 with the IRS. To obtain the automatic extension, the IRS must receive the 7004 by the original due date of the tax return – which is always 3 months and 15 days after the close of the tax year. You can either e-file the tax extension or mail it to the IRS.

    Tips & Warnings

    • If you need to file a state income tax return for the S corporation, you should consult your state’s tax agency for specific instructions on how to obtain a filing extension. In Georgia, for example, the state doesn’t require the filing of a separate extension form as long as you attach the IRS Form 7004 to the state return when you file it.
    • Checking the box in the first question of Part III on Form 7004 makes the S corporation eligible for a 3-month extension to file and pay any tax without having to file Form 7004.
    • Keep in mind that filing Form 7004 only extends the time to file a complete Form 1120S for the corporation; however, it doesn’t extend the time to pay any tax that is due. Therefore, if the S corporation owes tax because of built-in gains or passive income, you should make the tax payment when filing Form 7004. Otherwise, the corporation will accrue late-payment penalties – which are separate from the penalties imposed for filing the S corporation’s tax return after the due date.

    About the Author

    Jeff Franco's professional writing career began in 2010. With expertise in federal taxation, law and accounting, he has published articles in various online publications. Franco holds a Master of Business Administration in accounting and a Master of Science in taxation from Fordham University. He also holds a Juris Doctor from Brooklyn Law School.