Electronic Extensions

[Black Bart]

This is one of those questions posters usually preface with "This is going to sound like a stupid question, but...".

That said, here goes:

How do you file extensions electronically?

Is it

(1) done through tax programs?

If the answer to that is "yes," how can I transmit the extension only? Looks like the whole thing would be sent again when you punch "transmit" (don't know if it's even possible to send just part of a return).

(2) done someplace else? Does IRS have its own little spot to send such stuff to like they do for tax deposits -- you know, that EFTPS website (think that's right -- can't ever get that stupid name right).

(3) done with a secret code known only to electronistas? Where's that EF buff-bud o' mine who won't risk a letter in the mail? He'll know about this for dang sure.

(4) something unknown to numerical science?



All replies (snide or otherwise) are appreciated. Best regards, BB


(hmm...for some reason my mood's lightening lately {yours?} -- maybe the Approach of the End...?)

[S T]

Your Software

Not sure which software you are using

I have to toggle mine on the Extension Screen for Extension only - then I can create the efile for just the extension to send to my software provider for transmission.

Sandy

[Black Bart]

Using

ATX. Thanks Sandy. I'll take a look around the program for such.

[RitaB]

With ATX

With ATX, you add the "E-file Info" form and then you can select "Create E-File" and you have two choices; E-file the return, or e-file the extension.

You select "e-file extension" (I didn't get this far by being stupid.)

Then, OK, the program yells at me to fix about 40 things, which I do, and eventually I get the thing ready to transmit.

The next year it goes alot better cause for the repeat offenders, I only have about five things I forgot to do.

[Bonnie]

Oh wow that sounds like a lot of work. Tax Slayer has a menu for electronic extensins. It will pull any info in the return and then do just the extension and then you choose paper or Efile and it's done. Takes about 1 min.

[Black Bart]

Thanx

for the responses, girls -- your help is much appreciated. I think maybe I've got it figgered out now, but (with apologies to the Duke) I maybe backslide, take a shot of paper, and drop two envelopes in the mail anyway.

...you have two choices; E-file the return, or e-file the extension.

You select "e-file extension" (I didn't get this far by being stupid.)

No, you did not , but you're pretty dang funny.

[joanmcq]

Actually in ATX its even easier. There is a tab on the 4868 in the return called 'efile'. You fill out the stuff on there, create efile (just check extension, not federal or state), and create. Then eflie it from the efile section just like a return. You can even filter by extensions so you just see any created extensions.

Easy, easy, I've been doing them all day.

[FEDUKE404]

Not complicated at all

Software has an "extension" selection (using the existing client tax file information in an "as is" condition).

You answer four questions (tough ones - how much your tax is, how much you've already paid, how much you "owe," and how much you are paying). For a nearly complete return, those numbers are already there. For a return in a more primitive condition, you can insert those numbers.

If balance is due, enter the RTN/DAN and appropriate amount to debit, and such will occur on April 18th (I think). There is NO choice as to payment date. Payment due extensions require client signature(s) on Form 8878.

Efile the extension, and you are good to go!

I have done several of these....including my own...., and the IRS acceptance response (with a tracking DCN) usually returns within a few hours of "pushing the button."

Quick/painless/etc.

FE

[taxea]

Don't know how other program work but with ProSeries you check the box to file the ext on the info worksheet. Click option box to go to the form, Check the freeze all boxes option, save the return and then click on the efile lighting rod. This opens a box that lets you select the 4868 to file. The return will not file.

[Black Bart]

John H (You around?)

I believe you once mentioned a reason for inserting the amount of $100 (or something) on a paper 4868 even if not sending a payment in order to do/establish...preparer protection/something else/what? Is this right?

The reason I ask is I have several clients who want to use the 4868 as (gasp) an extension of time to pay (can you believe it?) instead of an extension of time to file. You posted a very good "extensions essay" a year or two ago and I'm interested in maybe doing a few the slow, painful, complicated way (dropping envelopes in the mail with zeros and no money) instead of going the quick and painless R2D2/FANTAN/no choice debit/signed 8878s route.

Thanks.

[JohnH]

Sure, happy to oblige. The extension needs to be as accurate as possible with respect to the estimated tax liability, tax withheld, and balance due on lines 4, 5, and 6. That is all the IRS requires in order for it to be valid. They can't retroactively deny the extension as long as it meets that test, regardless of how much or how little is actually paid with the extension ( if any). If there truly are unknowns, I'll even estimate the liability and balance due high rather than low, on the theory that it can't do any harm. I wpn't send in an extension with all zeros on 4,5, and 6 unless it's an absolute last resort, and then I tell the client it will get them past the immeidate problem but I can't make any promises that it would hold up in an audit.

If the client is sending any payment, it goes on line 7. Nothing is required to be sent, but I like the idea of sending at least a token payment with the extension. Even if it's only $25 - $100, it serves a couple of purposes. First of all, it makes the client feel a little better that they made an effort of some sort, and secondly the canceled check serves as further evidence that the extension was filed on time. (I also suggest using certified mail with return receipt for the same reasons). The payment also serves to reduce the balance due, however small the reduction might be.

Having done all the above, the client avoids the 5% FTF penalty entirely. They will owe interest at about 4% APR and a FTP penalty of 1/2 of 1 percent per month, which combined works out to an effective annual percentage rate of 10%, or just over 3/4 of 1 percent per month.

That looks an awfully lot like an extension of time to pay in my book. And the effective interest rate of 10% APR is pretty fair for an unsecured loan. Higher than a HELOC, but much lower than credit card rates. So in spite of the fact that IRS says "an extension of time to file isn't an extension of time to pay", as a practical matter that's exactly what it is. I never parrot the IRS standard line - I talk to the client about the practical side of the extension issue. After all, I think practical advice that they can actually use is an essential part of good client service.

[Gary2]

(I also suggest using certified mail with return receipt for the same reasons).

Why bother with return receipt? While there may be other cases where the document must be received on time, for returns and extensions all you need is to show that it was mailed on time.

[JohnH]

Extra insurance - that's all. The return receipt only adds a couple of dollars to the $3 cost of mailing via certified mail. I think $5 for a certified mail with return receipt just gives you extra evidence if something goes wrong. It demonstrates good faith and shows every attempt to document what happened. It also shows when someone at IRS actually signed for the envelope.

None of the above actually proves what was IN the envelope, but in situations in which I had to prove timely mailing in the face of huge penalties, IRS has never questioned the contents once they saw the two pieces of info I had for them. (mailing receipt plus signed returrn receipt). They probably would have accepted the mailing receipt only, but for the small additional cost why take chances?

[RitaB]

&^%$ this day

The reason I ask is I have several clients who want to use the 4868 as (gasp) an extension of time to pay (can you believe it?) instead of an extension of time to file.

Message this morning: Hey, Rita, this is "Dude Whose Return You Finished Last Night Who Owes $3800 Cause I Had 4% Withheld". Can you get me an extension for one week? Call and let me know. I will come in to see you later today.

Awesome.

[JohnH]

Rita: If he really only needs a week, he should just file the return with no payment (or a partial payment). It will take them a month to send him a bill, and he can clear the decks at that time, including accrued FTP penalty and interest. No need for an extension in this case, as his outcome will be exactly the same.

(Although it might be a good idea to drop an extension in the mail just to guard against him "forgetting" to follow through).