Rejected extension request

[Adam H. Kerman]

I requested an extension to file a business tax return for 2019, the due
date of which was extended till July 15 2020 due to COVID-19. I filed a
six month extension till January 15, 2021, but this was rejected. I just
received the rejection letter a couple of weeks ago.

I never found guidance on the IRS Web site whether the six month
extension was from the new filing date or the original filing date.

Does anyone know what to cite on the off chance IRS pursues a late
filing penalty?

The return was filed after July 15, and long before the extension
request was processed.

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[ira smilovitz]

On Monday, May 3, 2021 at 5:34:49 PM UTC-4, Adam H. Kerman wrote:
> I requested an extension to file a business tax return for 2019, the due
> date of which was extended till July 15 2020 due to COVID-19. I filed a
> six month extension till January 15, 2021, but this was rejected. I just
> received the rejection letter a couple of weeks ago.
>
> I never found guidance on the IRS Web site whether the six month
> extension was from the new filing date or the original filing date.
>
> Does anyone know what to cite on the off chance IRS pursues a late
> filing penalty?
>
> The return was filed after July 15, and long before the extension
> request was processed.
>
> --

There isn't enough information in your post to give a complete answer. What type of business return was it? Not all business return filing deadlines were extended to July 15 due to COVID. Any return whose original deadline was March 15 was not extended. If you didn't request an extension for a March 15 return by March 15 (and it's obvious from your post that you didn't submit the request in March), the extension would have been denied as non-timely.

Second, there is no 6-month extension from July 15 to January 15. The "automatic" extensions granted on July 15 were only extended to the regular extended due date (October).

Third, I'm assuming that since you didn't get a quick acceptance or rejection, you paper filed your extension request. If so, did you mail it by certified mail to prove timely filing?

You need to determine why. It is possible that the IRS made an error, but it's equally likely that the extension request was denied because it was filed late or incorrectly.

Ira Smilovitz, EA
Leonia, NJ

[Adam H. Kerman]

ira smilovitz <ira.sm...@gmail.com> wrote:
>On Monday, May 3, 2021 at 5:34:49 PM UTC-4, Adam H. Kerman wrote:

>>I requested an extension to file a business tax return for 2019, the due
>>date of which was extended till July 15 2020 due to COVID-19. I filed a
>>six month extension till January 15, 2021, but this was rejected. I just
>>received the rejection letter a couple of weeks ago.

>>I never found guidance on the IRS Web site whether the six month
>>extension was from the new filing date or the original filing date.

>>Does anyone know what to cite on the off chance IRS pursues a late
>>filing penalty?

>>The return was filed after July 15, and long before the extension
>>request was processed.

>There isn't enough information in your post to give a complete answer.
>What type of business return was it? Not all business return filing
>deadlines were extended to July 15 due to COVID. Any return whose
>original deadline was March 15 was not extended. If you didn't request
>an extension for a March 15 return by March 15 (and it's obvious from
>your post that you didn't submit the request in March), the extension
>would have been denied as non-timely.

The return in question was extended till July 15. 990 with 8868
extension.

>Second, there is no 6-month extension from July 15 to January 15. The
>"automatic" extensions granted on July 15 were only extended to the
>regular extended due date (October).

That's what IRS's position is, yes. I was wondering where I would find
guidance that that's correct. I thought extensions were relative.

Similarly, this year May 15 is Saturday. If I file for a six month
extension, where is the guidance that it's not till November 17?

>Third, I'm assuming that since you didn't get a quick acceptance or
>rejection, you paper filed your extension request. If so, did you mail
>it by certified mail to prove timely filing?

I had forgotten but when I was looking though receipts today, I found
that I had sent it certified. However since January 15 was an invalid
request date, it was simply denied.

>You need to determine why. It is possible that the IRS made an error,
>but it's equally likely that the extension request was denied because it
>was filed late or incorrectly.

Hence my question.

[Bob Sandler]

"Adam H. Kerman" wrote:
>Similarly, this year May 15 is Saturday. If I file for a six month
>extension, where is the guidance that it's not till November 17?

Tax Day for individuals extended to May 17: Treasury, IRS
extend filing and payment deadline
IR-2021-59, March 17, 2021
https://www.irs.gov/newsroom/tax-day-for-individuals-extended-to-may-17-treasury-irs-extend-filing-and-payment-deadline

"Individual taxpayers who need additional time to file
beyond the May 17 deadline can request a filing extension
until Oct. 15 by filing Form 4868 through their tax
professional, tax software or using the Free File link on
IRS.gov. Filing Form 4868 gives taxpayers until October 15
to file their 2020 tax return but does not grant an
extension of time to pay taxes due."

Bob Sandler

[ira smilovitz]

On Monday, May 3, 2021 at 8:29:59 PM UTC-4, Adam H. Kerman wrote:
> ira smilovitz <ira.sm...@gmail.com> wrote:
> >On Monday, May 3, 2021 at 5:34:49 PM UTC-4, Adam H. Kerman wrote:
>
> >>I requested an extension to file a business tax return for 2019, the due
> >>date of which was extended till July 15 2020 due to COVID-19. I filed a
> >>six month extension till January 15, 2021, but this was rejected. I just
> >>received the rejection letter a couple of weeks ago.
>
> >>I never found guidance on the IRS Web site whether the six month
> >>extension was from the new filing date or the original filing date.
>
> >>Does anyone know what to cite on the off chance IRS pursues a late
> >>filing penalty?
>
> >>The return was filed after July 15, and long before the extension

> >>request was processed. [some material trimmed]

The information you were looking for can be found in IRS Notice 2020-23 and the underlying regulations. Specifically -

III B. Postponement of Due Dates with Respect to Certain Federal Tax
Returns and Federal Tax Payments

For an Affected Taxpayer with respect to Specified Filing and Payment
Obligations, the due date for filing Specified Forms and making Specified Payments is
automatically postponed to July 15, 2020.

This relief is automatic; Affected Taxpayers do not have to call the IRS or file any
extension forms, or send letters or other documents to receive this relief. ***However,
Affected Taxpayers who need additional time to file may choose to file the appropriate
extension form by July 15, 2020, to obtain an extension to file their return, but the
extension date may not go beyond the original statutory or regulatory extension date.*** [emphasis added]

For example, a Form 4868, Application for Automatic Extension of Time to File U.S.
Individual Income Tax Return, may be filed by July 15, 2020, to extend the time to file
an individual income tax return, but that extension will only be to October 15, 2020.
That extension will not extend the time to pay federal income tax beyond July 15, 2020.

> The return in question was extended till July 15. 990 with 8868
> extension.

So an extension was filed before April 15 for three months to July 15. This leaves an additional 3-month, non-automatic extension as a possibility, not an additional 6 months. I'm not familiar with the underlying regs for exempt organization returns, but I would think the only question(s) remaining are: did the 8868 extension request you submitted effectively extended the filing deadline to October 15 or was it mooted by the universal extension of the April filing deadline; and was the actual return filed between July 15 and October 15.

> >Second, there is no 6-month extension from July 15 to January 15. The
> >"automatic" extensions granted on July 15 were only extended to the
> >regular extended due date (October).
> That's what IRS's position is, yes. I was wondering where I would find
> guidance that that's correct. I thought extensions were relative.
>
> Similarly, this year May 15 is Saturday. If I file for a six month
> extension, where is the guidance that it's not till November 17?

IR-2021-59, IR-2021-67, and IRS Notice 2021-21 provide the guidance for returns being filed in 2021.

> >Third, I'm assuming that since you didn't get a quick acceptance or
> >rejection, you paper filed your extension request. If so, did you mail
> >it by certified mail to prove timely filing?
> I had forgotten but when I was looking though receipts today, I found
> that I had sent it certified. However since January 15 was an invalid
> request date, it was simply denied.

Yes. Certified mail won't help with an invalid request.

Ira Smilovitz, EA
Leonia, NJ
> --

[Adam H. Kerman]

ira smilovitz <ira.sm...@gmail.com> wrote:

>The information you were looking for can be found in IRS Notice 2020-23

>and the underlying regulations. . . .

Thank you.

[Taxed and Spent]

Assuming the taxes were paid timely, what does the IRS due with respect
to a late filed return? Seems almost "no harm, no foul". Almost.

[Adam H. Kerman]

Taxed and Spent <nospam...@nonospam.com> wrote:
>On 5/4/2021 9:03 AM, ira smilovitz wrote:
>>On Monday, May 3, 2021 at 8:29:59 PM UTC-4, Adam H. Kerman wrote:

>>>. . .

>>>The return in question was extended till July 15. 990 with 8868
>>>extension.

>>So an extension was filed before April 15 for three months to July 15.

>This leaves an additional 3-month, non-automatic extension as a

>possibility, not an additional 6 months. . . .

In a normal year, the 990 is due on the 15th of the fifth month after
close of the tax year, so May 15 for calendar year filers. One may
request an automatic 6 month extension till November 15. When the filing
date was extended till July 15, I thought I could request a 6 month
extension till January 15, but IRS disagreed and denied my extension
request.

>>>. . .

>Assuming the taxes were paid timely, what does the IRS due with respect
>to a late filed return? Seems almost "no harm, no foul". Almost.

With certain exceptions, organizations that file 990s have no tax
liabilities and the penalty for late filing isn't based on taxes owed.

[paultry]

On 5/4/2021 17:08, Taxed and Spent wrote:

>
>
> Assuming the taxes were paid timely, what does the IRS due
> with respect to a late filed return?  Seems almost "no harm,
> no foul".  Almost.
>

With a few exceptions (some information returns, partnership
return come to mind) late filing penalty is a percentage of
tax unpaid by the due date. So yes, NHNF. But, if a late
filed return later generates a subsequent tax assessment -
math error correction, unreported income, audit assessment,
etc. - the late filing penalty will be computed on the newly
assessed tax.

[Taxed and Spent]

On 5/4/2021 4:23 PM, Adam H. Kerman wrote:
> Taxed and Spent <nospam...@nonospam.com> wrote:
>> On 5/4/2021 9:03 AM, ira smilovitz wrote:
>>> On Monday, May 3, 2021 at 8:29:59 PM UTC-4, Adam H. Kerman wrote:
>
>>>> . . .
>
>>>> The return in question was extended till July 15. 990 with 8868
>>>> extension.
>
>>> So an extension was filed before April 15 for three months to July 15.
>
>> This leaves an additional 3-month, non-automatic extension as a
>> possibility, not an additional 6 months. . . .
>
> In a normal year, the 990 is due on the 15th of the fifth month after
> close of the tax year, so May 15 for calendar year filers. One may
> request an automatic 6 month extension till November 15. When the filing
> date was extended till July 15, I thought I could request a 6 month
> extension till January 15, but IRS disagreed and denied my extension
> request.
>
>>>> . . .
>
>> Assuming the taxes were paid timely, what does the IRS due with respect
>> to a late filed return? Seems almost "no harm, no foul". Almost.
>
> With certain exceptions, organizations that file 990s have no tax
> liabilities and the penalty for late filing isn't based on taxes owed.
>

What about for other types of entities,with tax liabilities?

[Adam H. Kerman]

Taxed and Spent <nospam...@nonospam.com> wrote:
>On 5/4/2021 4:23 PM, Adam H. Kerman wrote:
>>Taxed and Spent <nospam...@nonospam.com> wrote:
>>>On 5/4/2021 9:03 AM, ira smilovitz wrote:
>>>>On Monday, May 3, 2021 at 8:29:59 PM UTC-4, Adam H. Kerman wrote:

>>>>>. . .

>>>>>The return in question was extended till July 15. 990 with 8868
>>>>>extension.

>>>>So an extension was filed before April 15 for three months to July 15.

>>>This leaves an additional 3-month, non-automatic extension as a
>>>possibility, not an additional 6 months. . . .

>>In a normal year, the 990 is due on the 15th of the fifth month after
>>close of the tax year, so May 15 for calendar year filers. One may
>>request an automatic 6 month extension till November 15. When the filing
>>date was extended till July 15, I thought I could request a 6 month
>>extension till January 15, but IRS disagreed and denied my extension
>>request.

>>>>>. . .

>>>Assuming the taxes were paid timely, what does the IRS due with respect
>>>to a late filed return? Seems almost "no harm, no foul". Almost.

>>With certain exceptions, organizations that file 990s have no tax
>>liabilities and the penalty for late filing isn't based on taxes owed.

>What about for other types of entities,with tax liabilities?

I don't know. I've never had to file a return like that.

[Stuart O. Bronstein]

Taxed and Spent <nospam...@nonospam.com> wrote:

> What about for other types of entities,with tax liabilities?

Corporations and partnerships are required to file a return even if
they have no income. The penalty is minor, though.

--
Stu
http://DownToEarthLawyer.com

[Rick]

>>
>> "Stuart O. Bronstein" wrote in message
>> news:XnsAD20D623AF50Es...@130.133.4.11...

>>
>> Taxed and Spent <nospam...@nonospam.com> wrote:
>>
>> > What about for other types of entities,with tax liabilities?
>>
>> Corporations and partnerships are required to file a return even if
>> they have no income. The penalty is minor, though.

That brings up the related question - what is the penalty for an individual
who fails to file a return on time but who pays the required taxes on time?
For example - and this is actually a real-life case - an individual owes
approximately $1000 on their 2020 taxes. They file an extension request
with form 4868 before the tax deadline (May 17th) and they pay their
required taxes before the deadline. They now have until October 15th to
file the actual return. Suppose for whatever reason, they fail to file that
return on time. Let's say they don't file until November 15th or December
15th or even January of 2022. What is their penalty, since at that point
they theoretically don't owe any money?


--

[ira smilovitz]

On Wednesday, May 5, 2021 at 11:17:21 AM UTC-4, Rick wrote:
> >>
> >> "Stuart O. Bronstein" wrote in message
> >> news:XnsAD20D623AF50Es...@130.133.4.11...
> >>
> >> Taxed and Spent <nospam...@nonospam.com> wrote:
> >>
> >> > What about for other types of entities,with tax liabilities?
> >>
> >> Corporations and partnerships are required to file a return even if
> >> they have no income. The penalty is minor, though.
> That brings up the related question - what is the penalty for an individual
> who fails to file a return on time but who pays the required taxes on time?
> For example - and this is actually a real-life case - an individual owes
> approximately $1000 on their 2020 taxes. They file an extension request
> with form 4868 before the tax deadline (May 17th) and they pay their
> required taxes before the deadline. They now have until October 15th to
> file the actual return. Suppose for whatever reason, they fail to file that
> return on time. Let's say they don't file until November 15th or December
> 15th or even January of 2022. What is their penalty, since at that point
> they theoretically don't owe any money?
>
>
> --

The failure to file penalty is 5% of the unpaid tax per month up to a maximum of 25%. The apparent penalty in this situation would be $0, but the risk is that the statute of limitations for the government to assess tax doesn't begin until the return is filed. The statute of limitations for claiming a refund of overpaid taxes begins on the due date for filing the return. (This last statement is a generalization as there are circumstances which will extend the refund statute in whole or in part.) The added risk is that while all income is taxable unless specifically exempted, all deductions are ",,,allowed as a matter of legislative grace, and only as there is clear provision therefor can any particular deduction be allowed, and a taxpayer seeking a deduction must be able to point to an applicable statute and show that he comes within its terms. " (White v. United States, 305 U.S. 281 (1938)). What this means practically is that the IRS can disallow every deduction claimed on the late filed return and force the
taxpayer to cross every t and dot every i to justify the deductions.

Ira Smilovitz, EA
Leonia, NJ

[Rick]

"ira smilovitz" wrote in message
news:4118e02f-50d4-41b8...@googlegroups.com...

In this case, it would just be standard deduction. It's a very simple
return, but for complex reasons related to the stimulus payments, the
taxpayer is delaying filing as long as possible. The interesting thing is
that when the late return is filed - the amount owed will be zero because
the taxes were paid with the extension request.

--