Newswise — John J. Petosa, CPA, J.D., professor of accounting practice at the Martin J. Whitman School of Management at Syracuse University, says tax extensions are necessary for many taxpayers. He is available to discuss some of the reasons for filing an extension, including:
1. File an extension if you are currently under audit. If you are being audited and file an extension, the IRS cannot include the current year in their audit.
2. If you don’t have all the information to file the return completely and accurately, you should wait. The primary way that a person is audited either via a letter or in person is because the information on their return fails to match a 1099, W-2 or some other information form that was filed with the IRS using the taxpayer’s social security number. Making sure you have all the information in your return is a wise reason to extend the return.
3. It's important to remember that filing an extension does not extend the time to pay the tax due. Even if you file the extension you are still required to pay the tax that you think is due with the extension.
4. Filing the extension and paying the amount that is due avoids the penalty and possible criminal sanctions associated with the “failure to file.” File the extension and get the extra time to file completely rather than not extend the return, file late and pay late and be subject to significant penalties and interest.
5. If you have asked for a private letter ruling on a particular tax position you are considering using you should extend the return in anticipation of the response.
To reach Petosa, contact Kerri Howell at 315-443-3671, or [email protected].