Contact: Gigi Thompson Jarvis
202.822.6232, x119
gjarvis@naea.org

For Immediate Release

Missing the Tax Deadline
Filing an Extension Doesn’t Postpone Payment

Washington, DC (April 11)—Tax day is almost upon us and all across the land, good reasons and poor excuses are already being formulated by those who know by now that they are not going to meet the deadline. For some, the reason is an unexpected family emergency, or a sudden influx of work requiring night and weekend hours. Others postpone the process of tax preparation for fear of finding out they owe a tax bill they can’t pay. Or maybe it’s just a question of procrastination.

The sad truth is that in the overwhelming majority of cases, if you don’t file by April 15, it’s probably going to cost you. The IRS charges a late filing penalty of 5 percent of the amount due for each month or part of a month your return is late. There is a minimum penalty of $100 or the balance of the tax due on your return.

And the hurt doesn’t stop there. A common misconception is that if you request a filing extension with Form 4868 the IRS will afford you additional time to pay your tax liability—not so! The extension is for filing your return, not for paying whatever you may owe; that’s still due April 15. Late payment results in an additional penalty on top of the penalty for late filing. This is usually 0.5% of any tax not paid by the due date and is charged for part of a month that the tax is unpaid. The maximum penalty for both late payment and late filing is 25 percent.

Assuming you know that you owe the IRS some amount of money, but (for whatever reason) are simply not in the position to pay it on April 15, what’s the best course of action? The answer: pay as much as possible by April 15 and contact the IRS about implementing an installment plan for the remaining balance. Even without paying a penny, you can file a return or request an extension and avoid having to pay a failure-to-file penalty. Even if your return is not absolutely picture perfect as of April 15, in many cases you would be better off filing it timely, and amending it later, than being a no-show.

Last year, the IRS received around 10 million extension requests and expects to see a comparable number this year. For 2009, there are special dispensations available only to certain taxpayers: for example, the IRS has announced that victims of severe storms and flooding beginning March 12 in New Jersey, West Virginia, Rhode Island and Massachusetts may qualify for tax relief and be eligible to postpone filing taxes, making payments and contributing to Individual Retirement Accounts (IRAs) until May 11. In addition, members of the armed services serving in combat zones have 180 days after leaving the combat zone to file their returns.

Assuming, like most of us, you do not fit within any category of taxpayer subject to special dispensations from the IRS, where do you begin if you know you won’t be able to file on time? Start by filing that aforementioned extension: go to www.irs.gov and download Automatic Extension Form 4868, available here: http://www.irs.gov/pub/irs-pdf/f4868.pdf. Fill it out and send it in along with a payment of the amount you estimate that you owe. IMPORTANT: there is no extension to file the request for extension! The Form 4868 must be filed by the date your regular return is due (for most of us, on or before April 15, 2010). If you file the request for extension late, or otherwise fail to comply with its eligibility requirements, the IRS can reject your request, resulting in the potential for additional difficulties. After you’ve submitted Form 4868 along with your estimated payment, you have until October 15, 2010 to submit your return.

Once you’ve filed Form 4868 and sent in a payment that represents your best estimate of what you owe, promise yourself you will not fall into the trap of becoming a serial extender. Take a deep breath and get some help! If taxes aren’t your thing, you can join the estimated 60 percent of taxpayers who hire a paid preparer every year to make sure they comply with the tax code and take advantage of every exemption, claim and deduction to which they are legally entitled.

Enrolled agents are tax professionals licensed by the US Department of the Treasury to represent taxpayers before all administrative levels of the IRS. While attorneys and certified public accountants are also licensed, only enrolled agents specialize exclusively in taxes. Enrolled agents are required to complete many hours of continuing education each year to ensure they are up-to-date on the constantly changing tax code and abide by a Code of Ethics. To find an enrolled agent in your area, go to www.naea.org and click on “Find an Enrolled Agent.”

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The National Association of Enrolled Agents (NAEA) is a non-profit membership organization composed of tax specialists licensed by the US Department of the Treasury. NAEA members are dedicated to maintaining the highest professional standards and to increasing the integrity of the tax administration system.