Tax Returns
Corporations subject to U.S. tax must file federal and state income tax returns. Different tax returns are required at the federal and some state levels for different types of corporations or corporations engaged in specialized businesses. The United States has 13 variations on the basic Form 1120 for S corporations, insurance companies, Domestic International Sales Corporations, foreign corporations, and other entities. The structure of the forms and the imbedded schedules vary by type of form.
United States federal corporate tax returns require both computation of taxable income from components thereof and reconciliation of taxable income to financial statement income. Corporations with assets exceeding $10 million must complete a detailed 3 page reconciliation on Schedule M-3 indicating which differences are permanent (i.e., do not reverse, such as disallowed expenses or tax exempt interest) and which are temporary (e.g., differences in when income or expense is recognized for book and tax purposes).
Some state corporate tax returns have significant imbedded or attached schedules related to features of the state's tax system that differ from the federal system.
Preparation of non-simple corporate tax returns can be time consuming. For example, the U.S. Internal Revenue Service states that the average time needed to complete Form 1120-S, for privately held companies electing flow through status, is over 56 hours, not including recordkeeping time.
Federal corporate tax returns for most types of corporations are due by the 15th day of the third month following the tax year (March 15 for calendar year). State corporate tax return due dates vary, but most are due either on the same date or one month after the federal due date. Extensions of time to file are routinely granted.
Penalties may be imposed at the federal and state levels for late filing or non-filing of corporate income tax returns. In addition, other substantial penalties may apply with respect to failures related to returns and tax return computations. Intentional failure to file or intentional filing of incorrect returns may result in criminal penalties to those involved.
Read more about this topic: Corporate Tax In The United States
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