Foreign corporations may be entitled to additional extension for filing returns.

• Author: Cooper, Michael

Regs. Sec. 1.6081-5 provides that foreign corporations that maintain an office or place of business in the United States are granted an automatic extension of time for filing returns and for paying tax until the fifteenth day of the sixth month following the close of the tax year. No form is required for claiming this extension, but taxpayers using it must attach a statement to their return showing that they are qualified to claim the extension.

Regs. Sec. 1.6081-3 contains the regular automatic six-month extension of time for filing granted to corporations that file Form 7004, Application for Automatic Extension of Time to File U.S. Corporation Income Tax Return, by the fifteenth day of the third month following the close of the tax year.

IRS policy had previously been that the extensions were mutually exclusive and could not be claimed together. The instructions to Form 7004 state that foreign corporations with a U.S. office or place of business should not file Form 7004 unless they are unable to file their returns within the three-month extended period. In that case, Form 7004 had to be filed by the original due date for the tax return to obtain the six-month extension.

However, the Service recently changed its position in Rev. Rul. 93-85. It held that a foreign corporation with a U.S. office that had elected the automatic three-month extension to file its return and pay its tax under Regs. Sec. 1.6081-5 could obtain an additional three-month extension under Regs. Sec. 1.6081-3 to file its return (but not to pay tax). To...