An extension can be filed late but the IRS will ignore it and say you are filing your Form 1120H late. The Form 1120H is due three and one-half months after the calendar or fiscal years ends. If you file a timely extension then you will have time to file your Form 1120 or Form 1120 H.
Remember an extension is only an extension of filing your tax return and not in paying of your taxes. Penalties and interest will still accrue during the time of the extension. However, the filing of an extension does keep the penalties at the lower rate. Your basic penalties for filing by the due date would be 25% stretched out over a two year period of time. Your filing of the same tax return without an extension but by the same extension due date would be a mere 75% penalties stretched out over a two year period of time. All penalties are assessed on a monthly basis as well. You should thus then observe the 15th as the end of the previous month and the 16th will give you another monthly assessment.
But if your question is rather the election of filing a Form 1120H you will have one year from the due date of the return with elections included. So if your due date without extension is March 15, 2010 then count forward one year and you will have March 15, 2011 as your last date to make an election to file a Form 1120 H. Past this date you will need to file Form 1120 and you will not be allowed to elect to File Form 1120H.
Please be advised that in some instances the Form 1120 can be more expensive. This is usually the case. With Form 1120 you will be required to depreciate your new assets rather than to immediately expense them. You do not have an option to expense tools when associated with residential usage. “Refrigerators and stoves and furnaces in a residential setting do not qualify for business usage property and thus are not eligible for the Section 179 exclusion. This is not the same as the 30% or 50% exclusion which from prior tax returns you were required to take or to elect out of in prior tax years if the equipment was a new asset and but not for used assets.
So to keep your total options open do file an extension by the three and one-half month due date. Do calculate your Form 1120 and Form 1120 H hopefully prior to the extension due date if extended or the due date if an extension is not filed. And filing the Form 1120H does give you the right to file (whichever tax return was lower or Form 1120 if lower) and to get your lowest tax liability if filed within the one year or one year plus extension if filed timeframe.
File timely always though for your truest lowest cost. As a fiduciary you will not want to get yourself in the position of having to reimburse your members or the board for penalties and interest to the IRS for not keeping up on your duties in a timely fashion.
