Do you need to fill out a business tax extension application, Form 7004? We have deciphered the IRS instructions to help you better understand the guidelines for requesting an extension. Don’t forget that you can easily e-file Form 7004 online with an Authorized IRS e-file Provider like TaxExtension.com.
Form 7004 is called the “Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns.” This form consists of 3 main sections and can be used to apply for a 5- or 6-month business extension. While Part 3 is mandatory for all filers, you must choose between filling out Part 1 or Part 2 depending on the type of business return you’re requesting the extension for.
To be approved for a tax extension, you need to submit Form 7004 by the original due date of your return (usually March 15 for businesses). Note that the due date for some businesses is actually April 15 (the deadline for personal taxes). Also remember that this is not an extension of time to pay your taxes, which are still due by the original filing deadline. To streamline the process, you can electronically pay your taxes with your extension application.
Here is a line-by-line guide for filling out IRS Form 7004:
This section is for businesses that are eligible for a 5-month tax extension. These include partnerships, trusts, certain estates, and some multi-member LLCs. You must enter the 2-digit “form code” that corresponds to your tax return. The codes are listed on Form 7004. If you enter a form code on Line 1a, do not make an entry on Line 1b (Part II). In most cases, a 5-month extension will give you until September 15 to file your return.
This section is for businesses that are eligible for a 6-month tax extension. These include C corporations, S corporations, REMICs, electing large partnerships, multi-member LLCs, and certain estates. You must enter the 2-digit “form code” that corresponds to your tax return. The codes are listed on Form 7004. If you enter a form code on Line 1b, do not make an entry on Line 1a (Part I). In most cases, a 6-month extension will give you until September 15 to file your return.
Check this box if you’re requesting a tax extension for a foreign corporation that doesn’t have a U.S. office or place of business. For this type of business, tax returns are due by the 15th day of the 6th month following the end of the tax year. Therefore, Form 7004 must be filed by that date in order to obtain a valid 6-month extension.
Check this box if you’re requesting an extension for a corporation that is the common parent of a group filing a consolidated return. You will need to attach a list of the group’s members and include their names, addresses, and EINs (Employer Identification Numbers). For specific guidelines regarding the list format, see the IRS Instructions for Form 7004.
As a general rule, the parent corporation and its consolidated group members must all use the same taxable year. Additionally, if all members of the affiliated group are not properly listed, the entire group may forfeit its ability to elect to file a consolidated return.
Check this box if the organization requesting an extension is a corporation or partnership that qualifies under IRS Regulations (section 1.6081-5). These include foreign corporations with an office or place of business located in the U.S., as well as domestic corporations that:
• Conduct business and maintain books/records outside of the U.S. and Puerto Rico, or
• Earn their principal income from sources within the U.S.
Under Regulations section 1.6081-5, these types of corporations are automatically given an extra 3 months to file AND pay their taxes. Form 7004 does not need to be submitted for this 3-month extension, which moves the deadline to the 15th day of the 6th month following the end of the tax year. Simply attach a statement explaining why the corporation is eligible for an extension to file and pay. Note that Form 7004 can be filed to request an additional 3-month extension beyond that (just be sure to check the box on Line 4).
There is another exception for certain partnerships that maintain their books/records outside of the U.S. and Puerto Rico. These types of partnerships are automatically allowed an extra 2 months to file AND pay their taxes. Form 7004 does not need to be submitted for this 2-month extension. Simply attach a statement explaining why the partnership is eligible for an extension to file and pay. Note that Form 7004 can be filed to request an additional extension (3 months for Form 1065 filers, and 4 months for Form 1065-B filers), just remember to check the box on Line 4.
If you don’t file based on the calendar year, enter the appropriate tax year beginning and ending dates.
If you have a short tax year, check the applicable box for the reason that applies to you. The options listed are: Initial return, Final return, Change in accounting period, and Consolidated return to be filed. If none of these reasons apply, check the box for “Other” and attach a statement that clearly explains the circumstances that caused the short tax year.
On this line, enter the total tentative tax that the business expects to owe the IRS, including nonrefundable credits. Enter -0- if you expect the amount to be zero.
On this line, enter the business’s total payments and refundable credits. The term “payments” generally refers to estimated tax payments that were made during the year.
Subtract Line 7 from Line 6 to arrive at the “balance due,” which is the amount of tax owed by the business for that year. Remember that a tax extension only gives you more time to file your return. The amount shown on Line 8 must still be paid by the return’s original deadline. If you electronically file Form 7004, you can also make an electronic tax payment to settle your outstanding balance. At TaxExtension.com, you can e-file Form 7004 online and submit your tax payment via EFW (electronic funds withdrawal) directly from your bank account. It really couldn’t be any easier!