March 15 is one of the most important dates on the tax calendar for business owners, yet it is also one of the most frequently missed. Partnerships, multi-member LLCs taxed as partnerships, and S corporations all face a March 15 filing deadline for their annual tax returns—a full month before the individual April 15 deadline. Missing this date triggers automatic penalties that can be substantial, particularly for partnerships with multiple partners.
Which Entities File by March 15?
The March 15 deadline applies to calendar-year partnerships (Form 1065) and S corporations (Form 1120-S). Because the vast majority of passthrough entities use a calendar year, this deadline affects most small and mid-sized businesses structured as partnerships, multi-member LLCs, or S corps. C corporations that use a calendar year also file by April 15 (Form 1120), not March 15.[1]
The reason for the earlier deadline is practical: partnerships and S corporations issue Schedule K-1s to their owners, who need that information to complete their own individual returns by April 15. The staggered deadlines were designed to ensure that K-1s are available in time for individual filing.
What Happens If You File Late?
Partnership Penalties
The penalty for late filing of a partnership return is $235 per partner per month (or fraction of a month) that the return is late, for up to 12 months. For a partnership with five partners, a return that is three months late generates a penalty of $3,525. For larger partnerships, the numbers escalate quickly—a 20-partner entity facing the same delay owes $14,100.[2]
These penalties are assessed automatically by the IRS and apply even if the partnership owes no tax at the entity level. The fact that partnerships are passthrough entities—meaning the partners pay tax on their individual returns—does not excuse the partnership from timely filing its information return.
S Corporation Penalties
S corporations face the same $235 per shareholder per month penalty structure for late filing. The penalty applies to the S corporation's Form 1120-S and is assessed against the corporation itself, not the individual shareholders.[3]
How to Get an Extension
If the return cannot be completed by March 15, the entity should file Form 7004 (Application for Automatic Extension of Time to File) on or before the deadline. The extension is automatic—no reason needs to be given—and it extends the filing deadline by six months, to September 15. Filing Form 7004 is straightforward and can be done electronically. There is no cost to file an extension.
The critical point is that the extension must be filed by March 15. An extension filed on March 16 does not prevent late-filing penalties from accruing. The extension also only extends the time to file the return, not the time to pay any tax owed (though this is less relevant for passthrough entities, which generally do not owe entity-level tax).
What Should Be Done Before March 15?
Even if the full return will be filed on extension, there are several items that warrant attention before March 15. First, estimated K-1 information should be communicated to partners and shareholders so they can plan their own estimated tax payments and filing strategies. Second, any entity-level tax elections—such as the partnership representative designation under the BBA audit regime or the S corporation's election to pay state passthrough entity tax—should be evaluated and prepared.
Third, the entity should review its estimated tax obligations. While most passthrough entities do not owe federal entity-level tax, Mississippi imposes a pass-through entity election that may require payment, and some states impose minimum franchise taxes or filing fees that are due with the return or the extension.[4]
Reasonable Cause Abatement
If the return is filed late without a valid extension, the penalty can sometimes be abated if the entity demonstrates "reasonable cause" for the delay. The IRS applies a facts-and-circumstances test, and acceptable reasons include reliance on a tax professional who failed to file on time, natural disasters, and serious illness of the person responsible for filing. A simple claim that "we didn't know the deadline" is not reasonable cause.[5]
For small partnerships (those with 10 or fewer partners, all of whom are natural persons), the IRS has an administrative procedure for automatic penalty abatement on the first late filing if the partnership can demonstrate reasonable cause. This is Revenue Procedure 84-35, and it provides a safety valve for small partnerships that miss the deadline for the first time. But it is not a guarantee—the IRS retains discretion—and it only applies once.
The most reliable approach is simply to file Form 7004 by March 15 every year, whether or not the return is ready. The extension is free, automatic, and eliminates all risk of late-filing penalties.