E-filing vs. paper filing Form 7004: which should you use?

How do e-filing and paper filing compare?

The extension itself is identical: same length, same conditions. E-filing doesn't make the IRS more likely to grant it; it only tells you sooner whether it did.

Can every Form 7004 be e-filed?

Almost every one. The Form 7004 instructions name six returns whose extensions cannot be filed electronically: Forms 8612, 8613, 8725, 8831, 8876 and 706-GS(D), all uncommon excise-tax and transfer-tax returns. Extensions for those go on paper. The everyday business returns, Forms 1120, 1120-S, 1065 and 1041, can all be extended electronically.

Our wizard e-files Form 7004 for Forms 1120, 1120-S, 1065, 1041 (estates, trusts and bankruptcy estates) and 1120-F. One limit: we can't yet e-file an extension for the parent of a consolidated group, because it needs a list of every member's name, address and EIN, which our wizard doesn't collect.

How do you e-file Form 7004?

Through tax software or an Authorized IRS e-file Provider, which transmits it to the IRS's Modernized e-File system. IRS Free File is for individuals only, so there is no free e-file option for a business extension; commercial software and providers charge a fee. You enter the same details as on paper: the return you're extending, EIN, legal name, address, tax year and the three tax figures.

The IRS answers each submission with an acknowledgment. Accepted means you have your extension; rejected comes with an IRS rule number, and you get five days to correct and resend it, which still counts as on time if the first one was. The common rejections and their fixes are in Form 7004 rejections. With us, it takes a few minutes and a flat $9.95, and we email you when the IRS answers, usually within a few hours and almost always within 24 hours.

How do you file Form 7004 on paper?

1. 1

   Use the current Form 7004

   Download the latest revision of Form 7004 and its instructions from IRS.gov, and complete it for one return: the form code, EIN, legal name, address, tax year and the three tax figures.

2. 2

   Find the right address

   The instructions' Where To File table gives the IRS address for your return. It depends on the return you are extending, where the business is located and, for some returns, its total assets.

3. 3

   Mail it so you can prove the date

   A U.S. Postal Service postmark on or before the due date counts as filing on time, and so does one of the private delivery services the IRS designates. Certified mail or a carrier receipt gives you the proof.

4. 4

   Pay the balance separately and keep a copy

   Pay any tax due by the original date (electronically, for a corporation), and keep a copy of the form with the mailing receipt. No approval will arrive.

How do you pay the balance due either way?

The balance is due by the original due date whichever way you file, because an extension gives more time to file, not to pay. Most entities must make federal tax deposits by electronic funds transfer, including corporate income tax. A corporation pays through EFTPS or its IRS business tax account, or has its tax professional, bank or payroll service pay electronically for it. Partnerships and S corporations usually owe nothing with the extension.

Some e-file software can withdraw the payment from your bank account along with Form 7004; that is the one case in which the extension needs a signature. We don't do that: when we e-file your Form 7004, you pay the IRS directly, and our checkout charges only our fee. More in does an extension extend the time to pay?

Which should you choose?

• E-file if the deadline is close. You know within hours whether the extension was accepted, and a rejection can still be fixed. Mail gives you neither.
• E-file if you want proof on file. The accepted acknowledgment is the IRS's own record that the extension was granted.
• Use paper if your return cannot be e-filed. That means the six returns above, or a case your software or provider does not support, such as a consolidated group with us.
• Use paper if cost matters more than speed. Filing on paper costs only postage. Give yourself time to mail it with tracking, and keep the receipt.

E-file vs. paper FAQ

Sources

• Instructions for Form 7004: the six returns that cannot be e-filed, where to file, no signature, no approval notice, and electronic deposits
• Publication 4164, Modernized e-File (MeF) Guide for Software Developers and Transmitters (PDF): the acknowledgment as approval, the electronic postmark, the five-day perfection period, and a signature only with an electronic funds withdrawal
• IRS: Private delivery services (PDS): the timely-mailing rule and the designated private delivery services
• IRS: E-file: Do your taxes for free: IRS Free File is for individual returns
• IRS: EFTPS: The Electronic Federal Tax Payment System: paying federal tax electronically