Federal Tax Return Extension Issues for Texas Practitioners

If you did not file extensions at March 15 or April 15, you may be required to file them by paper. Extensions can still be e-filed for individual returns up through May 17, but as it stands right now, these will not be available for e-file after May 17. This is because the IRS has not programmed the disaster area ZIP codes into its system with a June 15 due date.

We have reached out to our IRS stakeholder liaison and asked that the IRS remedy this. The issue is being elevated, so hopefully it will be resolved. Our IRS contact has indicated that any incorrect penalties will be reversed if you are in the disaster area or have self-certified for the disaster. Whether the reversal is automatic has yet to be determined.

For now, if you need to get an extension filed for some reason, you should send a paper extension. Consider a notation at the top “Federally declared disaster area – filed under Section 7508A.”

We will keep you updated on any changes to this issue.

 

Comments

[David Donnelly]

If the return has a balance due, file right away and plan on a letter-writing campaign;
At least the earlier filing date will reduce the proposed penalties; and, make sure the client understands this is an ‘under-funded IRS problem,’ not the preparer’s fault

If there is no balance due, probably wait six weeks to two months. The preparer can check the transcript periodically to see if the extension has been posted. That time will be hard to charge for, however.

There is no good answer. I do recommend that the preparer document everything and, if the client is so inclined, refer the problem to the taxpayer’s member of Congress. This moves the problem to another office, one which is at least partially responsible for underfunding the IRS.

[Dave Hardy]

Any update on this? I heard there was some pressure for the IRS to reprogram their computer to accept them electronically. If we paper file the extension, I wonder how long we should wait to file the actual return to give them time to process the paper extensions.

[William Taylor]

Hope the IRS gets its act together by the June 15 filing, extension date because there will be a ton of extensions to be filed June 15. No different than 2020.

[Patty Wyatt]

Mr. Ham, please refer to the blog post of March 24:
https://tscpafederal.typepad.com/blog/2021/03/federal-tax-filing-relief.html

Here also is the IRS' disaster victims FAQ:
https://www.irs.gov/businesses/small-businesses-self-employed/faq-for-disaster-victims-affected-taxpayer-and-records-necessary-to-meet-a-deadline-for-filing-and-paying

[Chuck]

What if client is out of state but CPA lives in Texas?

[Patty Wyatt]

Mr. Harry, the winter storm disaster relief provided an extension of the April 15 deadlines to June 15. It did not extend the October 15 deadline.

At June 15, taxpayers can request the automatic extension to October 15.

As of now, the September 15 and September 30 deadlines also stand.

[Robert Harry]

Is a 1040 extension granted for 6 months following the 06/15/21 modified due date, i.e., final return now due 12/15/21?