A pass-through entity is an entity that is taxed at the member level. Partnership’s Partners and an S Corp’s Shareholders. A Florida Corporation can be a pass-through entity like a partnership if it elects to be an S Corp. A single or multi-member LLC can be an S Corp, with a Corporate Election and simultaneous S Election. Two or more member LLCs are automatically a partnership for tax filings and an S Election is redundant as the Partnership effectively acts in the same way for tax purposes.
Corporations and S Corps were required to file by March 15th this year. The IRS changed the filing deadline for Partnerships to March 15th to enable the partners to have time to receive the K-1’s generated from the partnership to enable them to file timely by April 15th. The filing deadline for Corporations was pushed off till April 15th, with S Corps remaining with the March 15th deadline.
The State of Florida does not require income tax filings for passthrough entities, as there is no Florida Personal Income Tax. However, there is Florida Corporate Tax. A Corporation must be an S Corp to avoid Florida Corporate tax. Florida Corporations will need to file form F 1120 by May 1, 2020. IRS form 1120 must be filed by April 15th. The State of Florida Continues to enforce timely filing of corporate tax as this is one of the few forms of taxation in Florida. Corporations need to be sure to file extensions on May 1, 2020, if additional time is required to file.
Corporations generally are not penalized by IRS if there is no taxable income, however, S Corps and Partnerships can have a penalty assessment based on the number of members and days the tax return is filed late. Those penalties are quite substantial, and therefore, our firm reached out to taxpayers early in the season to ensure that extensions were filed to avoid this, in case the taxpayer was not yet prepared to file.
The extension is only effective for a six month period. If an extension is filed and received the taxpayer is generally guaranteed of non-assessment of penalty if the tax return is filing within the six month extension period. I always advise taxpayers to send tax returns by certified mail with receipt of mailing. It is the responsibility of the tax payer to insure receipt. Taxpayers should always request proof from the tax preparer of e-filed and accepted returns as proof of filing.
Let us know if you have any questions.