Foreign corporations are eligible for two extension periods.

In Rev. Rul. 93-85, the IRS concluded that the two extension periods available to foreign corporations that maintain an office or place of business within the United States are not mutually exclusive. Thus, such foreign corporations may take advantage of both extensions--to file under Regs. Sec. 1.6081-3(a) and to file and pay under Regs. Sec. 1.6081-5(a)(3)--but may not defer filing for more than six months from the return's original due date.

Under Sec. 6072(b), a calendar-year corporation generally must file its tax return by March 15. However, under Sec. 6072(c), a calendar-year foreign corporation has until June 15 to file its tax return if it does not have an office or place of business in the United States and is not a foreign sales corporation (FSC) or a former FSC.

Sec. 6081(a) authorizes the Service to grant taxpayers reasonable extensions of time to file their returns. Except for taxpayers who are abroad, extensions may not be granted for more than six months. Regs. Sec. 1.6081-3(a) allows a corporation to obtain an automatic six-month extension to file its return, provided that a Form 7004, Application for Automatic Extension of Time to File U.S. Corporation Income Tax Return, is filed and its estimated unpaid tax liability is paid by the original filing deadline.

Regs. Sec. 1.6081-5(a)(3) also provides that a foreign corporation that maintains an office or place of business within the United States may obtain an automatic three-month extension, not only for filing its return, but also for payment of tax. To obtain this three-month extension, the foreign corporation must simply attach a statement to its return (when filed) demonstrating its eligibility for the extension.

Rev. Rul. 93-85 addressed the interplay of these two extension periods and noted that a foreign corporation may avail itself of both extensions for the same tax year. However, the maximum extension period is six months (from the original due date of the return), unless the taxpayer is "abroad." The revenue ruling concluded that the foreign corporation in the ruling was not "abroad" because it maintained an office in the United States. Thus, this calendar-year foreign corporation could obtain a sixmonth extension of time to file its return--until September 15--and a three-month extension of time to pay its tax--until June 15.

The ruling also clarified the timing for filing Form 7004 when a calendar-year foreign corporation sought to take advantage of both the three-month and sixmonth extension periods. If the foreign corporation later submitted a statement with its tax return showing it was eligible for the three-month extension to file and pay, the Form 7004 should be filed by June 15 (along with payment of its properly estimated unpaid tax liability for the year). Since there had been a general impression that foreign corporations were required to file Form 7004 by the return's original due date, the ruling's clarification that the three-month extension period under Regs. Sec. 1.6081-5(a) delays the need to file the additional extension request until the extended due date (June 15 for a calendar-year corporation) is welcome news. Note: Neither type of extension will toll the accrual of interest on any unpaid tax liability determined to be due, but not paid, by the return's original due date. However, by using the three-month extension provided for in Regs. Sec. 1.6081-5(a)(3) (deferring filing and payment), in conjunction with the Regs. Sec. 1.6081-3(a) filing extension period, foreign corporations may delay payment of taxes by three months and defer filing for six months, without incurring penalties under Sec. 6651 and Regs. Sec. 301.6651-1(a). Only foreign corporations that are "abroad" may request a further extension of time to file beyond the six-month period. It is unclear whether a foreign corporation without a U.S. office or place of business would be considered to be "abroad" for this purpose.