Form 7004 Penalties: Late Filing, Late Payment and Interest
Quick answer
Miss the extended due date and the late-filing penalty applies. Don't pay by the original due date and the late-payment penalty (1/2 of 1% a month, up to 25%) and interest apply, even with an extension.
The late-filing penalty is different for each return. For partnerships and S corporations, it's per owner, per month.
Late-payment penalty
Generally 1/2 of 1% of any tax not paid by the due date, for each month or part of a month it stays unpaid, up to 25% of the amount due. It isn't charged if you can show reasonable cause. Corporations have a 90% safe harbor (below).
Late-filing penalty, by return
These apply when the return is filed after its due date including extensions. Amounts are from each return's current instructions, for returns required to be filed in 2026. The IRS adjusts the dollar figures each year.
| Return | Penalty |
|---|---|
| Form 1120 (C corporation) | 5% of the unpaid tax for each month or part of a month, up to 25%. If more than 60 days late, at least the smaller of the tax due or $525. |
| Form 1120-S (S corporation) | $255 for each month or part of a month (up to 12 months), times the number of shareholders. If tax is due, add 5% of the unpaid tax per month, up to 25%. If more than 60 days late, at least the smaller of the tax due or $525. |
| Form 1065 (partnership) | $255 for each month or part of a month (up to 12 months), times the number of partners. |
| Form 1041 (trust or estate) | 5% of the tax due for each month or part of a month, up to 25% (15% a month, up to 75%, if fraudulent). If more than 60 days late, at least the smaller of $525 or the tax due. |
Examples
- Partnership, 4 partners, 3 months late: $255 x 4 x 3 = $3,060, even if no tax is due.
- S corporation, 2 shareholders, 1 month late, no tax: $255 x 2 x 1 = $510.
- C corporation, $20,000 unpaid, 2 months late: 5% x 2 = 10%, or $2,000, plus the late-payment penalty and interest.
Examples use the amounts for returns required to be filed in 2026 and round months up. Actual penalties depend on your dates and facts.
Interest
Interest is charged on tax not paid by the original due date, from that date until it's paid, even with an extension and even if you have reasonable cause. Interest is also charged on some penalties.
The corporate 90% rule
A corporation with an extension isn't charged the late-payment penalty if two things are true: the tax on Form 7004 line 6 (or paid by the regular due date) is at least 90% of the tax on its return, and the balance is paid by the extended due date.
K-1 penalties for partnerships and S corporations
Separate penalties can apply for each Schedule K-1 that's late or incomplete. For returns filed in 2026, it's $340 each, and more for intentional disregard.
Reasonable cause
Penalties can be waived if you show reasonable cause. Don't attach an explanation to the return. If you get a penalty notice, send the IRS an explanation then, and it will decide whether you qualify.
Filing Form 7004 late
It doesn't work. Form 7004 has to be filed by the return's original due date. If you've missed it, file the return as soon as you can and pay what you owe to stop more penalties and interest from adding up.
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