IRS Form 7004 Instructions

Tax payers have been informed and reminded by the IRS that individuals who need to request to file an extension should file using the form 4868 while businesses must submit using Form 7004. Form 7004 is the form tax payers use to file an automatic extension of the time to file their business tax returns for a partnership, multi member limited liability company filing as a partnership or business corporations. This extension must be filed by the expiry date of business tax return. The extension is automatic so taxpayers need not worry about their extension being approved.

Taxes must be paid by the due date. Form 7004 does not extend the time for tax payments. Taxpayers must pay their estimated tax according to their tax return even if they file an application for extension. They will also need to estimate their taxes as best as they can because underestimating their businesses may be subject to fines and penalties. It is also important for individuals and businesses to know that there are advantages and disadvantages to filing an extension which is why the decision requires some thought and consideration.

How to Complete Form 7004 for Business Tax Return Extensions

Form 7004 is used to file an extension application for corporations, S corporations, partnerships and various members Limited Liability Companies filings as partnerships. Form 7004 is a short form, by IRS standards. It just requires that you:

• Include the name and address and Individual Tax ID number (usually the employer ID number) for your business
• Enter the code for the tax return you are preparing (the codes are listed.
• Form 1065 for Partnerships and Multiple Members
• Form 1120 for corporations
• Form 1120S for sub capital s corporations

The form asks if your business qualifies under Regulations section 1.6081-5. This section covers foreign corporations, domestic corporations doing business and holding books outside the US, or domestic corporations whose principal income comes from US property. 

• Indicate if it is a short tax year and tick the box for the reason for the short year.
• Show the provisional total tax. This is the amount of tax owed to the business for that year. Although you did not submit your return, you will need to do some calculations to get this number.
• Show the total payments and any credits applied to your account and deduct this number from the provisional total tax.
• Lastly, show the balance that is due. You can pay by debit or credit card (use your business account).

How to Download Form 7004

The IRS has a chart where you can file Form 7004, depending on the tax return filed and the location of your business. If you are not filing a taxpayer, the IRS suggests using the modernized E-File system to email your extension application. This system allows you to select a provider from a list.

How to Fill Out Form 7004

The Form 7004, better known as a Request for a Tax Extension, is a detailed form with many areas that must be completed for the extension to be accepted. Though the Form 7004 has 8 sections that must be completed, not all sections apply to everyone.

• The 1st line consists of two parts, 1a and 1b. 1a only applies to those filing for an Automatic 5-1/2-Month tax extension. The second part 1b only applies to those filing for an Automatic 6-Month tax extension. You cannot file for an Automatic 5-1/2 and 6-Month extension. If you have entered information on both Line 1a and 1b your request for tax extension will be definitely rejected.
• The 2nd line is only for foreign corporations that don’t have an office located in the US
• The 3rd line is only for corporations. More Instructions will be on Form 7004, do well to read them. All Filers must complete this 3rd part of Form 7004
• The 4th line is for those entitled to a 3-Month extension. For more details view the instruction for Form 7004.
• The 5th line designates if you are filing out of a normal tax year or if you are filing for a short year and your reason why.
• The 6th line is to clarify the total amount of tax, including any non-refundable tax credits, the entity expects to owe for the tax year. Taxpayers should look for specific instructions for the applicable tax return to estimate the amount of the tentative tax they will owe. If they do not owe anything, then “0” should be inserted.
• The 7th line is for the total amount of payments made.
• The 8th line states that Form 7004 does not extend the time you have to pay the tax due. If the entity is a corporation or affiliated group of corporations filing a consolidated return, the corporation must remit the amount of the unpaid tax liability (shown in Line 8) on or before the due date of the return.

How to Submit an Extension Application

Businesses can use Form 4868 or Form 7004 to submit tax deferral applications, depending on the type of business you own. Companies can report income tax using Form 4868. This usually includes sole proprietorships and single-person limited liability companies (SMLLC) whose business profits have been included in your personal income. If this is the case, the forms to be submitted are the 1040 forms. Companies and partnerships use Form 7004. This includes multi-member Limited Liability Company businesses and companies submitted as partnerships. For most companies, the expansion approval is automatic.

The IRS says that if you only pay your income tax bill electronically, you don’t have to file Form 4868. According to the IRS: “If you pay using our electronic payment method, you do not need to submit Form 4868”. When you pay part or all of your estimated income tax electronically, the IRS will automatically process the submission time extension. You can pay online or by phone.
You can also use the IRS Direct Pay system, EFTPS or your credit / debit card to obtain an extension by paying all or part of the estimated income tax payable, and indicate that the payment is for extension. You will receive a confirmation number for inquiry.

Make Use of Software Programs or Electronic Files of Tax Experts

You can use your personal computer to electronically archive extended applications, or you can let your tax preparer do this. You can also use the IRS “free file” which allows you to submit an extension and request a payment method online. All major tax software applications allow you to submit an extension using Form 4868 or Form 7004. When logging in to prepare a tax return, there should be a tab or option to submit the extension. Although you will eventually have to pay for the return, you may not even charge any fees. You can use the personal or home business version of the product to submit Form 4868, or you can use the enterprise version to submit Form 7004. You can do this immediately, and then return to complete the tax return in a few days or weeks.

If you do not want to submit the form online, you can always submit extended applications via old-fashioned mailing. You can print out any form (Form 4868 and Form 7004) from the IRS website, with instructions.