Tax Guru-Ker$tetter Letter

Tuesday, March 19, 2002

IRS Encouraging Extensions

As I have repeated for decades, filing 1040s by April 15 is not the wisest move, for several reasons. I have actually done such a good job explaining that to my clients that I have only prepared a few 2001 tax returns so far and am still working on several 1999 & 2000 tax returns.

This year, there are some more reasons why filing your tax return later is a wise move, including one encouraged by IRS.

A new tax law giving more generous tax breaks for small businesses was passed by Congress on March 8, 2002 and signed into law the next day by President Bush. Rather than make it effective for 2002, it is retroactive to 2001. This is requiring IRS to revise many of its 2001 tax forms during the most hectic part of its tax filing season. In complete agreement with my policy, IRS has actually announced that it would prefer that taxpayers file for an extension until the new forms are available rather than file tax returns now that will need to be amended.

The other new reason for filing tax returns later is the IRS's announced plans to select 50,000 early filed returns for its extensive line by line audit. I will have more on this later.

KMK
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 3/19/2002 04:01:00 PM Send this post: