Due to many changes in the tax law under numerous tax acts that have been implemented over the past decade, including delay in the issuance of tax forms needed to complete individual income tax returns, the compression of the tax preparation and filing season has become even more severe.
For many clients with more complex filings, they are unable to attain all the information needed to file a complete and accurate return until the final days before the April 15 filing due date. This situation has created the need for tax preparers to file extension requests for a much higher percentage of clients than ever before.
When discussing the extension process, many clients tell us that they are fearful that by filing an Extension Request for time to file their income tax returns that they somehow increase their risk of audit by the Internal Revenue Service. In reality, not only does the extension request process not increase their audit risk, but statistically, it may even decrease audit risk!
One important note in analyzing the extension decision is to recognize that the Extension Request is only a request for time to file your income tax return.
If upon calculating the extension, it is determined that there is additional tax due payable for the tax year, you must make full payment of the outstanding tax balance with the Extension Request.
If you obtain an extension of time to file your return, but do not pay any residual tax balance due, you will be subject to late payment penalties and will be subject to interest charges back to the April 15 filing due date upon filing your extended income tax return.
As tax preparers, we want your tax return to be complete and accurate at the time of filing. If we approach you regarding the filing of an extension request, rest assured that we are doing so in order to provide the highest level of quality service and are always looking out for your best interest!
For any questions about extensions or to begin the process of filing an Extension Request, please contact the Zinner & Co. Tax Team.