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Tax filing deadline looms — what if your business can’t make it?

The Internal Revenue Service (IRS) requires businesses to file tax returns by March 15, 2019. A failure to file on time can result in penalties. The easiest way to avoid the penalty is to file on time. If your business is unable to meet the March 15 deadline, consider requesting an extension.

Businesses that fail to file on time or get an extension will likely face a financial penalty.

How is the penalty calculated? The IRS calculates the penalty by multiplying each month the return is late by the number of shareholders are partners within the business. The IRS can fine businesses incorporated as an S corporation or a partnership $200 for 2018 tax returns. The agency will fine partnerships $210.

The following example provides some clarity. A partnership of two individuals files their tax return 20 days late. The IRS will consider this filing two months late as it falls into two partial months — March and April. Since two partners are involved, the IRS will double the $210 fine. Thus, the business could face a $840 penalty for the late filing.

The IRS can also increase the penalty if a tax is due. If a tax is due, the agency can add an additional 5 percent of the unpaid tax for every month late. The IRS can also charge additional interest until the tax obligation is paid.

What if my business is penalized by the IRS? You can challenge a penalty. Whether looking to challenge a penalty or determine your tax obligation, an attorney experienced in this area of the law can provide guidance.

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