Relief Available To Many Extension Requesters Claiming Tax Benefits

[Elrod]

WASHINGTON —The Internal Revenue Service today provided late-payment penalty relief to individuals and businesses requesting a tax-filing extension because they are attaching to their returns any of the forms that couldn’t be filed until after January.

The relief applies to the late-payment penalty, normally 0.5 percent per month, charged on tax payments made after the regular filing deadline. This relief applies to any of the forms delayed until February or March, primarily due to the January enactment of the American Taxpayer Relief Act.

Taxpayers using forms claiming such tax benefits as depreciation deductions and a variety of business credits qualify for this relief. A complete list of eligible forms can be found in Notice 2013-24, posted today on IRS.gov.

http://www.irs.gov/uac/Newsroom/Relief-Available-To-Many-Extension-Requesters-Claiming-Tax-Benefits

[Lee B]

I saw this announcement too, but I don't quite understand it. Can someone explain it in plain english.

[jainen]

>>explain it in plain english<<

IRS won't charge late payment penalty this year, IF

your return has certain forms, mostly credits (including education and energy credits) or passive losses (rentals)

AND

you make a good faith estimate AND PAYMENT with a timely extension request.

There used to be a similar rule for all returns, but IRS gave up enforcing the "good faith" part. Back then it meant you were within 10% of the final number.

[grandmabee]

But if you are making the payment with the extension then there would not be a non payment penalty anyway. This sound better than it is. Just PR stuff.

[mcb39]

But if you are making the payment with the extension then there would not be a non payment penalty anyway. This sound better than it is. Just PR stuff.

That is exactly what I thought. Why go through the bother of filing an extension if you have to send an estimated payment along. That is just normal procedure. What is so hard about just giving us (say) a seven day extension of time to file.?

[Maribeth]

What is so hard about just giving us (say) a seven day extension of time to file.?

Because I am not going to be in my office 7 days after 4/15/13, thank you very much!! :P Extensions will be out by 4/15/13 and then National Tax Accountant Vacation days are here.

[jainen]

>>That is just normal procedure.<<

Yes, because those procedures are established under the code and regs. The difference here is what happens if you underpay in spite of a good faith estimate. Late payment penalty can be abated for reasonable cause, and IRS is saying the delay in certain forms constitutes reasonable cause. Most of those are business forms.

Note that abatement is NOT automatic. You still need to request it citing the notice as authority..

[Guest Taxed]

I think the key point to relate to clients is that interest clock is still running. They may think that interest is also suspended and will throw in a token amount with the extension.

[David1980]

That is exactly what I thought. Why go through the bother of filing an extension if you have to send an estimated payment along. That is just normal procedure. What is so hard about just giving us (say) a seven day extension of time to file.?

I'd assume getting out of the 5% per month failure to file penalty still makes the extension worth while even if you aren't making a payment/are still getting the 0.5% per month failure to pay penalty.