2002 Extensions
Deadlines are an essential part of life. If there were no such due dates for tax returns, most people would never get around to doing them. However, one of the worst things anyone can do in regard to tax returns is to rush together something just to meet a deadline. While some errors can be fixed with amended returns, there are enough that become locked in stone to make it a much wiser move to take our time and wait until we can do as accurate an original return as is possible.

With the first extensions for 2002 1040s running out on August 15, it's time to work on filing the second extension, which moves the due date to October 15. I've already started preparing and mailing in the 70+ extensions I will be filing by August 15.

The form that needs to be mailed to your IRS Service Center by August 15 is the 2688. Many people get intimidated by the 2688 because it asks you to state a reason for the extension request and requires a signature, neither of which is included on the first extension filed by April 15 (Form 4868). Many people think they need some kind of earth shattering reason for IRS to grant the extension. Not true. The following language, which I learned from an IRS agent decades ago, is just fine and is what I have pre-programmed into my Lacerte software. It has never failed to work on any of the thousands of 2688s I have sent to IRS for the October 15 extension.

We have been unable to assemble all of the information we require to prepare a complete and accurate tax return by August 15.

IRS will check the bottom of the 2688 and mail it back to the address you provided at the bottom, you or your preparer. The approved 2688 should be attached to the 1040 that you send in. The problem with doing this is that IRS doesn't process the 2688s very quickly and most of the approved forms aren't actually sent back until after the returns have been finished and mailed in. In this case, just attach a copy of the 2688 to the 1040 and keep the approved form in your file after it comes back.

The extension is really only necessary if you end up owing money with your 1040 because any late penalties are based on the amount due. If you are overpaid, the extensions aren't as crucial. I still send them in for returns that aren't expected to have any tax due for a couple of reasons. If there is ever any change in the tax, such as through an audit, where the refund becomes a tax due amount, the extensions will prevent any new late penalties from being charged. The extensions also keep the IRS computers from sending out late notices for unfiled tax returns, avoiding the tensions those letters create.

Just as with the initial extensions, some State tax agencies require that you send in a special extension form for them, while others just piggyback on the IRS's due dates. Check with your State's rules to see if it requires a separate extension form.

While many people, including clueless IRS employees, believe that October 15 is the end of the line for extensions, that is not the case. If there is a very traumatic problem in a person's life, additional extensions can be obtained from IRS. I actually have received approval from IRS to extend the due dates for some clients' 2001 1040s to October 15, 2003. I had only asked for June 15; but they close October 15. Such life-altering events that justify these longer extensions include deaths and medical problems for the taxpayers or their family, changes in marital status, relocations, disasters, and other major events that have made it impossible to prepare the returns. Just claiming that you've been too busy or forgot will not work.
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 8/03/2003 01:10:00 PM Send this post: