Compliance

Most tax trouble is not caused by getting the numbers wrong. It is caused by a date going past. We keep track of the filing calendar for your business so nothing arrives as a surprise letter.

An extension to file is not an extension to pay

This is the single most expensive misunderstanding in tax compliance, and it catches careful people every year. An extension moves the deadline for sending in the return. It does not move the deadline for paying what you owe.

The tax is still due on the original, unextended date. Both the IRS and the California Franchise Tax Board are explicit about this: file late with permission and you are fine; pay late and interest starts running from the original due date regardless.

The practical consequence is that an extension requires an estimate. You still have to work out roughly what you owe and pay it by the original deadline, which means the work does not actually get postponed as much as people hope.

FTB — Extension to file (opens in a new tab)California's own statement of the rule. Note the phrasing: your total tax owed is due on the original return due date, extension or not.

What being late actually costs

Two separate penalties can run at once, and they are not the same size. Failing to file is charged at 5% of the unpaid tax per month or part month, up to 25%. Failing to pay is charged at 0.5% per month or part month, also up to 25%.

Those are not the same order of magnitude. The late-filing rate is ten times the late-payment rate, which is why the penalty structure rewards getting the return in even when the balance cannot be paid at the same time.

When both apply in the same month, the failure-to-file penalty is reduced by the failure-to-pay amount. Failure-to-file stops after five months. Failure-to-pay continues past that point but it is also capped at 25%, so neither runs forever. Interest is charged separately from both and is not the same thing as a penalty.

For an individual taxpayer who filed on time and has an approved IRS payment plan, the failure-to-pay rate drops to 0.25% per month while that plan is in place.

IRS — Failure to File Penalty (opens in a new tab)The 5% per month rule, the 25% cap, and the reasonable-cause relief that exists if you have a genuine reason.
IRS — Failure to Pay Penalty (opens in a new tab)The 0.5% per month rule and the reduced 0.25% rate while an approved payment plan is in place.

Partnerships and S corporations are penalised on a different basis

For a partnership or an S corporation the late-filing penalty is not a percentage of tax owed. It is a set amount per partner or per shareholder, per month, for up to twelve months, and the amount is adjusted annually for inflation.

That distinction matters more than it sounds. A pass-through entity can owe no tax at all and still accumulate a substantial penalty purely for filing late, because the penalty is driven by how many owners there are and how many months have passed. A four-partner partnership six months late is a real bill against a zero-tax return.

This is why a pass-through with nothing to pay should never be the return that slips.

The recurring calendar

Compliance is not one date a year. For most businesses it is income tax returns, quarterly estimated payments, payroll tax deposits and returns, sales tax returns on whatever frequency the CDTFA assigned you, and annual information returns — each on its own schedule.

Deadlines shift when they land on a weekend or a legal holiday, moving to the next business day. We work from the official calendars rather than memory, and so should you — which is why the links below go to the agencies themselves rather than to a date we typed out and might not update.

IRS Publication 509 — Tax Calendars (opens in a new tab)The complete federal calendar: general, employer and excise tax dates for the year, in one place.
IRS — Employment tax due dates (opens in a new tab)Payroll specifically — deposit schedules, quarterly return dates and the annual filings.
FTB — Due dates for businesses (opens in a new tab)California entity deadlines, including the payments California requires that have no federal equivalent.
FTB — Due dates for individuals (opens in a new tab)Personal return and estimated payment dates for California.
CDTFA — Filing dates for sales and use tax returns (opens in a new tab)Sales tax runs on the frequency CDTFA assigns you, which can change. This is the schedule to check against.

Frequently asked questions

Does an extension give me more time to pay?

No. An extension only moves the filing deadline. What you owe is still due on the original date, and interest runs from that date. Both the IRS and the California FTB apply this rule.

I cannot pay. Should I still file?

Generally yes. The late-filing penalty is 5% of unpaid tax per month, against 0.5% for late payment — a ten-to-one difference in the rates. Your own position depends on the amounts and the caps involved, so call us and we will work it through.

What if the deadline falls on a weekend?

It moves to the next business day. The same applies to legal holidays. This is standard across the IRS, the FTB and the CDTFA.

My partnership owes no tax. Can I file late without consequence?

No. Partnership and S corporation late-filing penalties are charged per partner or shareholder per month, not as a percentage of tax. An entity owing nothing can still build a significant penalty simply by being late.

Can penalties be removed?

Sometimes. The IRS provides relief where the failure was due to reasonable cause rather than neglect, and there are first-time abatement provisions. It is worth asking rather than assuming the bill is final.