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Extended tax season?

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Wiles  
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#2
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I really don't understand this line of reasoning. Many Americans not able to pay? Okay I get that. But not able to file on time?

What's preventing anyone from filing an extension? Worse case, if someone is in the hospital with COVID and fails to meet the filing deadline and file an extension, there's reasonable cause for abatement there.
 

#3
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#4
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Given the state of the IRS currently, I think it makes sense to extend the deadline again this year.
I've had to call the IRS twice this week along for payments that went to the IRS in Aug 2020, and were cleared/cashed but not applied to the clients account. One was electronic, one was a mailed check with the SSN and tax period clearly indicated in the code on the back of the check. For BOTH of these cases, the IRS has sent Intent to Levy notices in Dec/Jan a full 3-4 months after payments cleared.
I'm also still waiting for multiple past years paper filed returns to be processed by the IRS that were sent in prior to July 15th 2020.

I am biased though, as I'm trying to juggle a day job and growing side work.
-
They seem to mention the free file in this letter so I think they are talking about free file clinics being overwhelmed with people needing assistance to file?
 

#5
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The issue last year is that we were walking into the unknown. Although there are still uncertainties, I should hope every professional firm has taken steps in the last year to adjust to the new normal. Therefore, there is no need for an extension to the April 15th deadline.

As it happens, in view of the lateness of consolidated forms 1099, I believe a deadline of May 15th would be appropriate but that is a whole other discussion.
 

#6
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And the lateness of whether or not unemployment is tax free or not.

And the lateness of states deciding whether to tax PPP or not.

I do like 5/15. Please don't make it 7/15 again. But if you do, I'm taking my vacations now.
 

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If they're going to make it 7/15 again this year, they may as well just make it 7/15 permanently.

All they're doing is just kicking the can down the road.
 

#8
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If we got 7/15 permanently, would the extended due date be abolished?
 

#9
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I just wish they'd make extensions automatic without filing the forms so that we don't need to waste everyone's time and effort. The taxes could still be due 4/15 for all I care.

SumwunLost wrote:If we got 7/15 permanently, would the extended due date be abolished?


The problem with a 7/15 hard deadline is that S corps and partnerships can still extend to 9/15.
 

#10
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Aye, and therein lies the problem, Missingdonut. Would a 7/15 deadline apply to all calendar year tax returns?
 

#11
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I do hate wasting time processing extns and sending vouchers out on 3/15 for tax returns that are in process or we are holding until we finish the 1040.
 

#12
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SumwunLost wrote:Aye, and therein lies the problem, Missingdonut. Would a 7/15 deadline apply to all calendar year tax returns?


I mean, they got Congress to realign due dates so that passthroughs were due 9/15 and 9/30 for 10/15 personal filings, so you'd probably have to move those due dates to 6/15 and 6/30 to make the system work.

Then again, I'm not a proponent of a 7/15 due date.
 

#13
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Some of us are still operating store front operations and not dealing with just higher income tax payers. Dealing with this in Covid is a real challenge. Add in forms not yet ready, new laws to understand, the challenge of the stimuli payments etc.- an extension of time will be greatly appreciated.
 

#14
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Things have gotten so late coming out over the past several years: updated tax software due to last minute law changes, 1099's (don't get some from the major brokerages until March), etc. Now we have all of the new laws with no real guidance on lots of things, and Congress looking at making some things retroactive to 2020. To me everything is a mess and I don't see it getting any better any time soon. Congress should be working on future tax law, not retroactive. It is almost impossible to do tax planning any more. I think they should permanently move business returns (corporate/partnerships) to a 4-15 deadline and individual deadlines to 6-15. Then allow a 4 month extension for each. We could take on more clients and still work at a more relaxed pace (if we wanted to).
 

#15
HowardS  
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If they extend the April 15 deadline I hope they don't announce it until April 14.
I suffer from depreciation.
 

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6 pm eastern time on April 15th would be better.
 

#17
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Seaside CPA wrote:Things have gotten so late coming out over the past several years: updated tax software due to last minute law changes, 1099's (don't get some from the major brokerages until March), etc. Now we have all of the new laws with no real guidance on lots of things, and Congress looking at making some things retroactive to 2020. To me everything is a mess and I don't see it getting any better any time soon. Congress should be working on future tax law, not retroactive. It is almost impossible to do tax planning any more. I think they should permanently move business returns (corporate/partnerships) to a 4-15 deadline and individual deadlines to 6-15. Then allow a 4 month extension for each. We could take on more clients and still work at a more relaxed pace (if we wanted to).


I think the cure is to stop with the retroactive tax law, not to give them more time to write retroactive tax law.
 

#18
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I hate to have to admit that our entire office is hoping for some kind of delay. Maybe not until 7/15 but June 15 would not be bad. We use ProFx and I have never seen these kind of delays causing major back ups. Simple forms like the 8606, 8995, 8889, etc and states way behind as well.

Spent so much time waiting for guidance on PPP even though we told everyone not to apply for forgiveness and the deal8ng with PPP2. We are looking at record extensions unless they extend
 

#19
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agree with Berkshire...alot of time with PPP...and also staffing issues in this Covid environment. Though i'd like the tax deadline to be permanently changed to 5/1.
 

#20
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I just ran some preliminary numbers for comparison

In 2019 we had 110 returns done and out the door
In 2020 we had 120
In 2021 as of today was have 72

Now most of the returns have been the non complicated type but that is historically the case. I have only worked on maybe 5 personal returns as I do mostly corporate. I have six 11/30 year end S corps so I had sort of been oblivious to the drop in 1040 numbers. These national chains like Liberty and Block most really be feeling it
 

#21
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Another letter from the ways and means

https://waysandmeans.house.gov/sites/de ... ason_0.pdf
 

#22
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Every tax season has a different flavor to it. My personal clients have been deluging me this week, and it's not just my normal early February clients but people who usually come in late February and mid-March. I am going to struggle to maintain a 2 week turnaround.

zl28 wrote:agree with Berkshire...alot of time with PPP...and also staffing issues in this Covid environment. Though i'd like the tax deadline to be permanently changed to 5/1.


If we were to permanently change the date back, I'd say 5/15. 5/1 would be a rough day for those practitioners with payroll as part of their practice.

ManVsTax wrote:I think the cure is to stop with the retroactive tax law, not to give them more time to write retroactive tax law.


+1000
 

#23
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There should actually be a law that says Congress can't pass a retroactive tax law. I hate amending returns, and clients hate to pay for it when it is not their fault.
 

#24
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The issue last year is that we were walking into the unknown. Although there are still uncertainties, I should hope every professional firm has taken steps in the last year to adjust to the new normal. Therefore, there is no need for an extension to the April 15th deadline.

True, for me, but I feel for those preparing tax returns at their kitchen table with children underfoot. It is not just about the clients being able to get their stuff to us. It is also about the tax preparers being able to get the work done. I feel for the people who work in traditional CPA firms, staffed for high OT during tax season, and then expected to get the same work done in the current environment.

I am receiving IRS notices on returns filed two years ago (release of liability for trustee). I have not been able to get through to the FTB Tax Practitioner's Hotline. They are having trouble operating at the same level as before. By the same token, they should understand that we also cannot get the same amount of work done in the same time frame.
 

#25
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If the tax pro can take two minutes any time between now and April 15, he can magically move the deadline out to October 15, gaining an extra 6 months time to work through all the myriad difficulties there may be. Doesn't take an act of Congress to make it happen...
 

#26
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Frankly - I do not understand this comment. Seems like you need to calculate a rough tax liability in order to make sure that no additional interest/penalties will be owed. In California, extension is not valid unless most of the tax is paid by the deadline. We also need to worry about Obama-care issues that can be mitigated with an IRA contribution.
 

#27
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EZTAX wrote:In California, extension is not valid unless most of the tax is paid by the deadline.



Can you please provide a cite for this? My understanding is that extensions at the CA level are generally automatic. While a payment may be made by the deadline if tax is owed, non-payment does not necessarily invalidate the extension (but may result in the assessment of late payment penalties and interest).
Even more of my antics may be found on YouTube:
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#28
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Alex - I am unclear on this so should not have posted it. I believe the extension is valid but I remember (not 100% sure) that a 5% per month penalty for late payment starts 4/15 (in a normal year). I will try and look this up later if no one chimes in.
 

#29
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California grants an automatic 6 month extension to October 15. There is no form and nothing needs to be done - it's automatic, no questions asked.

Payment is due April 15. If not paid, the late payment penalty is 5% of the unpaid tax, plus 1/2% of the unpaid tax for each month it is unpaid.
 

#30
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4868 instructions state to properly estimate your tax liability using information to you.

E&O insurance (Camico) indicates that you may not file an extension without clients authorization and that it should be accurate (given above instructions) to avoid potential problems.

How do you solve these problems in two minutes per client?
 

#31
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Thanks for posting that Frankly. I always get confused but know that the penalty is high if the amount is not sent in by 4/15 as opposed to the Federal where the 5% penalty is for late filing not late payment.
 

#32
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Frankly wrote:If the tax pro can take two minutes any time between now and April 15, he can magically move the deadline out to October 15, gaining an extra 6 months time to work through all the myriad difficulties there may be. Doesn't take an act of Congress to make it happen...


I'm embarrassed to admit that I get confused about the federal extension underpayment penalty.

Please rate my understanding:

If a taxpayer fails to file an extension, and files their tax return and pays by, let's say 08/15, and there is a $1001 balance - the penalty USED TO BE $200 but now it would be $435.

If a taxpayer files a timely electronic extension with no payment, and completes their tax return prior to, let's say 8/15 again, and the tax balance is $1001 ,what is the penalty? Is it $20? Can't be.
 

#33
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ItDeoends, in your first scenerio, wouldn't that penalty be late filing and late paying/underpayment and the second scenario is just late/underpayment?
Cathy
CathysTaxes
 

#34
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fatherof3 wrote:4868 instructions state to properly estimate your tax liability using information to you.

You make the best estimate you can based on limited information which may not be much more that knowing how much they paid last year and if their income is up or down this year. Just don't be frivolous about it.

E&O insurance (Camico) indicates that you may not file an extension without clients authorization ...
Those people are reactionary. If they had their way you wouldn't file any tax returns at all because there might be a risk. As for authorization, when a client hands over his papers and says "do my tax returns", there is the authorization right there to do what is necessary to get the job done.
 

#35
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Heard...I was more of the question of people we hadn't heard from yet that we did not know whether to extend since they had provided us nothing.
 

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https://www.msn.com/en-us/news/politics ... r-BB1dWJv8

Per IRS Commissioner Rettig in this morning's CCH eblast, the unopened mail backlog and "trailers full of mail" are gone. No idea where they're at with unprocessed returns in the queue though.

Looking like this IRS does not want to postpone the deadline again this year, which is slightly surprising to me.
 

#37
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There was an eye opening post on Mass Society of CPAs that ask how can a mom of three school aged children , who also is running her own CPA keep up. Most schools in Massachusetts are still remote and guess what most of falls on the mom.

My kids are now in high school or college, my wife just went back to work but when I was working 80 weeks it all on her.

There is no reason why they should not extend. Massachusetts is still dithering with PPP. Biden is introducing new PPP rules with a March deadline. IRS can us if if our faxes 2553 forms were expected and client want to know if they should delay submitting 2020 returns to max out Stimulus 3
 

#39
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Two minutes? Lol. I usually spend 3-4 days before 4/15 extending, calculating estimates, triple-checking my lists to make sure nobody is missed.

The bigger advantage to having Congress extend the deadline is that it is a lot easier to convince clients we don't have to file by 4/15. That's my problem, this ridiculous fear among the public that if they don't file by 4/15, bad things happen.

Frankly wrote:If the tax pro can take two minutes any time between now and April 15, he can magically move the deadline out to October 15, gaining an extra 6 months time to work through all the myriad difficulties there may be. Doesn't take an act of Congress to make it happen...
 

#40
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I start on S-Corp/1065 extensions on March 7th, and personal extensions on April 7th.
Usually loose a week of productivity for each. All part of the game I guess.
 

#41
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Ditto to those last 2 posts. It's 10-30 minutes per 1040 client making a mock up tax return to estimate the extension payment, calculate the estimated tax payments and then communicate with them. All of this is a waste of time.

I guess this probably just means I have too many clients...
 

#42
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I emailed my corporate clients today and told the remaining ones to send me checks for their franchise taxes by March 11 to go in with their extensions. Received a reply from one that they had put a package in the mail to me yesterday with their corporate information in it. Advised them I'd be looking for the package, but they would still be extended, as I had about 10 in before them waiting to be prepared. I guess people think theirs is the only returns we do! LOL!
 

#43
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Wiles wrote:Ditto to those last 2 posts. It's 10-30 minutes per 1040 client making a mock up tax return to estimate the extension payment, calculate the estimated tax payments and then communicate with them. All of this is a waste of time.

I guess this probably just means I have too many clients...



This post will be unpopular, but this is one reason I'm not a huge fan of extensions. If I have to prepare the tax return anyway, just bang it out and deliver for review and signature. The extension often only adds to the time costs of preparing a return.

Obviously there are lots of reasons why it makes sense to extend. Im not denying that.

But from a business perspective, there's only so many you can do, extension or no extension.

As for the procrastinators, they are just going to exhibit the same behavior in September and October, and by then the stakes could be much higher, especially if they have any non us interests.

Our practice does not revolve around extensions so much.

We run a sprint, not a marathon, then we take lots of travel breaks and work 10-3 in the off-season - but of course that is just preference.
 

#44
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ItDepends wrote:This post will be unpopular, but this is one reason I'm not a huge fan of extensions.

I hate them too. No way will I do a mock up return solely for the purpose of helping Mr. Procrastinate avoid an underpayment penalty. If he already made his estimated payments I've already done most of that work. Nope. Make a good faith 2 minute SWAG and extend. If he needs to pay more in to avoid a penalty, he gets an email and a link to the payment website.
 

#45
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About half of the extensions I prepare are because of me. 4/15 is looming and I have piles of untouched / half-touched work around me. It's because I have too many clients. Or it's because I work in a highly seasonal business. Or, more likely, a combination of both.
 

#46
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Wiles wrote:About half of the extensions I prepare are because of me. 4/15 is looming and I have piles of untouched / half-touched work around me. It's because I have too many clients. Or it's because I work in a highly seasonal business. Or, more likely, a combination of both.


Nailed it. This is me too. Even in the 'before times' I had this problem.

I would favor an extension, even to May 15th. I think that would be reasonable given the difficulty getting work done these days. We are still answering client questions and providing reports for PPP loans and this local grant or that one.
 

#47
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Trying to decide when to make the call to take a break from prep work and start filing 3/15 extensions and sending vouchers and communicating with clients. I have been holding off not wanting to waste this time if they are going to move the deadline. But I think the 3/15 deadline is a guarantee right now. I guess I will start working on those tomorrow...
 

#48
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I'll start on Monday.
I've got a few more corps and partnerships in process that I'd like to get out the door before the time suck begins.
 

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I'm going to start on Monday. Right after Recked starts. I like to live dangerously.
 

#50
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https://www.irs.gov/newsroom/filing-sea ... ry-26-2021
Year over year filing season statistics:
Total returns received down 23.7%
Total e-filing by tax professionals down 31.0%

And now for something completely different.
https://content.govdelivery.com/account ... %7D#Second
IRS says, "Regardless of which set of numbers are used, this year’s filing season is on track and progressing smoothly thanks to the work of IRS employees, tax professionals, tax filing industry partners and members of the Free File Alliance."
Last edited by Wiles on 9-Mar-2021 11:02am, edited 1 time in total.
 

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