Extensions for MIA Clients

[RitaB]

Haha, yeah, I know it's too late now.

I counted up, and I got extensions for 17 missing in action.

On the 13th, my attitude was, "Who needs em?"

Yesterday, I got em extensions. My attitude was, "Where are they?" (Sniff. Sniff.)

Oh, some worthless trivia: I set my alarm for 30 minutes later, and woke up 45 minutes earlier than usual. Hmm.

[Catherine]

Haha, yeah, I know it's too late now.

I counted up, and I got extensions for 17 missing in action.

On the 13th, my attitude was, "Who needs em?"

Yesterday, I got em extensions. My attitude was, "Where are they?" (Sniff. Sniff.)

Oh, some worthless trivia: I set my alarm for 30 minutes later, and woke up 45 minutes earlier than usual. Hmm.

Yeah, I get extensions for all my MIA's. Most of 'em are folks who still haven't filed for 2008 - but I know eventually they'll show up, papers in hand and sheepish looks on face, with yet more tales of how life gets complicated. A couple may have been one-timers who don't come back, but it's not going to hurt them. Don't worry, Rita, they still love you.

On the trivia side, I woke up later than usual - but it's raining here so it's darker than most mornings, plus Gwen & I didn't hurry back from the contra dance (which itself ran a little late); we spent some time chatting with folks. Finally hauled in well after 11 (by which time I've usually turned into a pumpkin and gone to sleep).

[JohnH]

You mean you didn't meter a few extra envelopes before you went home yesterday?

In my experience most of the MIA's generally have refunds, so any of them who do show up probably don't have any problems. The other thing I tell them is that if they owe, the 5% per month clock is now ticking, so they need to minimze the damage by getting their info to me as quickly as possible. Most people with common sense would rather pay 5% than 25%, but then I contradict myself - if they had common sense they wouldn't be showing up after the 15th, would they?

[Lion EA]

Yeah, I did some extensions for clients I hadn't heard from yet. (Although, I didn't do 3/15 extensions for a couple of corporations that hadn't called. One is multiple years late anyway, so why should I spend my time if he doesn't care; the other usually files his own extension and gets back to me later in the year.)

I set my alarm as usual, because we're going away for a couple days -- daughter's concert and a church event -- but turned it off when it rang and didn't re-wake up until 90 minutes later. Just driving up to Hartford, but will be gone overnight so gotta pack. As I age, it takes me longer to pack my medications than my make-up!

[jklcpa]

I do not file extensions for MIAs. I only had 4 that didn't come back this year. Two moved out of my area, one is a coworker of my husband's that is very responsible, and one procrastinator. I called the one, and he used his wife's preparer.

For those of you that do file extensions for MIAs, what method do you use to arrive at the numbers if you haven't contacted them?

[Lion EA]

Only had two total MIAs. One, I just filed his 2007 and 2008 and had his 2009 W-2, so had a lot of history and still same employer. Other is a retired lady losing her memory, but her husband's pension and withholding are always the same, no COLA, in the 14 years I've been preparing her taxes. SALY.

[JohnH]

You can use all zeros on the extension and it will still be valid for filing purposes.

Only problem is, if they get audited and the numbers are wildly different, the auditor can retroactively deny the extension - probably would. But if there's no audit, almost anything on the extension form will sail right through. It's a big chance to take and I wouldn't do it except in an extreme emergency, but an extension that is potentially voidable is better than doing nothing.

[Catherine]

You can use all zeros on the extension and it will still be valid for filing purposes.

Only problem is, if they get audited and the numbers are wildly different, the auditor can retroactively deny the extension - probably would. But if there's no audit, almost anything on the extension form will sail right through. It's a big chance to take and I wouldn't do it except in an extreme emergency, but an extension that is potentially voidable is better than doing nothing.

It's also true and complete so far as I know at the time. I figure it can't hurt, might help, why not? I did one extension for a client whose package of papers I got on the 14th. Haven't even opened them yet. Sometimes he owes, sometimes he doesn't; crystal ball doesn't say which this year. So I sent in an all-zeros extension. If it gets audited and rejected, at least I tried and maybe next year he'll send his papers earlier.

[JohnH]

Yes when they come in that late they should be grateful for anything we can do. But something in the back of my mind keeps telling me that if I accept the info, then I may be accepting some potential liablity if things go south. So to be safe, I always make sure that any withholding and estimated tax payment info I have in my possession goes on the 4868.

I may estimate high when running the "Estimate of Total Liability" amount on line 4, especially when they aren't submitting any payment or submitting a nominal payment, because there's no downside to a high-side estimate. But I do feel better entering the "knowables" on the extension form on line 5, just to avoid potentially running afoul of the instuction to properly estimate the liability "using the information available to you".

I'm probably being overcautious about all this, but on average I generally file 40 or so extensions (about 60 this year) so I don't want to get tripped up by a minor oversight.

[jklcpa]

I'm in the cautious camp here and agree with JohnH. I would enter known withholding and estimates. If I'd done tax planning during the year that would be incorporated in the process. In Catherine's case, I would have opened that client's envelope on hand and made some attempt at a tax projection and looked for the payments to enter.

I would never just file an extension for someone that failed to contact me, and it wouldn't be all zeros unless I knew that it was someone who I believed would have no tax liability and had no w/h or ests.