Tax Extension Center continues its series of The Top 100 Reasons to File a Tax Extension. This series is intended to show taxpayers that a tax extension is valuable because it saves individuals and/or their businesses time, stress, and even money.
Today’s reason on our Top 100 list has to do with your chances of being audited. That word, audit, sends a chill down all of our spines when we hear it. The great news is that if you file a tax extension, the chances of you being audited are believed to be less than if you file your taxes on time.
No one outside the IRS knows for sure how the audit system really works, but many CPAs believe that tax extensions actually decrease your chances of getting an audit.
The theory is that IRS officers have an audit quota, and they start on it around tax time. Many accountants hypothesize that the quotas get filled well before the tax extension deadline of October 15 (September 15 for business taxes), and IRS agents have less incentive to put returns in the audit pile.
There is some discussion as to whether or not this is true, but filing a tax extension certainly won’t single you out for unfavorable treatment. Over 10 million (out of 140 million) taxpayers filed tax extensions last year. Half of all US corporations did as well.
Whether you are new to tax extensions or not, remember that filing a tax extension does not give you more time to pay what you owe the government or face the possibility of penalties and interest. You still need to make your payment by midnight on April 15.
Ever filed a tax extension before? Thinking about filing one this year? Drop me a note in the comment section below.
