We now must be cleared by client to file extension

[John of PA]

IRS just announced that we must have authorization or OK from the client to send in an extension. To send in an extension automatically without checking with the client is now a Cir 230 violation.

[taxxcpa]

Filing Extension

It makes sense. A client may have filed, using a new tax preparer and his previous prepare might erroneously assume he needed an extension.

[erchess]

What kind of authorization is required? Is a phone conversation or email enough?

[S T]

My questions as well! I usually discuss with client, have an email to them - but have not ever received an "ack" email or signed authorization.

Some clients we just know we have to file an extension for

Can someone provide a "link" to what the protocol is - as I guess we all need to know this moving forward into the filing season for 2012 tax returns.

Thanks for sharing info

Sandy

[FEDUKE404]

Source?

It makes sense to me - I would never file any extension without first clearing it with the client - no "blanket" approval.

However, I cannot find anything in writing (including a quick review of Circular 230) to support the position stated by John of PA. Can that source be provided, please? It might also clarify the related question raised by Sandy.

FE

[MAMalody]

My engagement letter gives me the authorization to file an extension, so, hopefully, I don't see this being a problem.

[Lion]

I like that Mike. I'm adding a sentence to my engagement letter.

[FEDUKE404]

Tell us more

I like that Mike. I'm adding a sentence to my engagement letter.

Questions I would have:

1 - Does this procedure mesh with Circular 230 (or whatever relevant) guidelines apply?

2 - Would a pro forma engagement letter paragraph override the "authorization" issue raised by OP?

3- Does the bar get raised further when Form 8878, especially with payments involved, becomes relevant?

(Yes, it would be helpful to see the actual IRS verbiage for this new requirement...... )

FE

[ChEAr$]

In my limited experience (39 years) the overwhelming number who may think they need an extension are those who owe money.

To prepare an extension we must have as much information as client has in order to estimate any balance due and in so doing thereby
obtain client's permission.

For me anyway extensions are rare and far between.

[JohnH]

I usually prepare 30-40 extensions (with permission of course), so I'll be very interested in what form the IRS-required permission must take. With me, sometimes its based on a phone call or an email exchange. Maybe that will have to change.

As Harlan pointed out, the majority of them owe. But for most of my clients, we just do a good-faith estimate and they pay whatever FTP penalty and interest might pop up, if any. They rationalize the cost by saying it relieves them of having to worry about it on deadline, and I wholeheartedly agree. Not any different than buying bread and milk at a convenience store rather than at the supermarket. But I did have one this year who had a $7K refund, which I estimated for them back in April, but they couldn't be bothered to get their info together until the first week of October. When they filed, I told them Merry Christmas - looks like the check will arrive just in time to buy gifts.

[John of PA]

The issue here, I presume is when we are down to a day or 2 before the deadline, we have not heard from a client who files an extension every year, and we cannot get a hold of them to confirm, should we file anyway to be safe? According to Cir 230, maybe not. I would assume any type of confirmation if fine, oral, Email, pre-authorization on engagement letter, but such details should be coming forward at a later date. This relates to the other post in that this is just one more administrative bottleneck while we are trying to meet the deadline which forces us to raise our fees. What difference should it make to IRS. If an extension if filed and the client already filed thier return and did not let us know, IRS will process the return and ignore the extension anyway, so why is IRS making this an issue. I can understand if a tax prepaer has a high rate of extensions filed after the actual return was already filed, they OK, IRS should check that out, but to make everyone stop what they are doing to get authorization is an administrative hardship in my view.

[geekgirldany]

I do several extensions each year and often do not have the permission of the client. I know the clients that always get an extension. I will call them but if I don't hear back I will send it in. I've never really thought about them going to another tax preparer being a problem. In my thinking it would not hurt if they already have a tax return filed. But maybe that is why the IRS has changed it. To many extensions with returns already filed.

[ChEAr$]

Who says IRS has changed this? Or was this Miz Hawkins voicing her opinion? There's a lot of difference you know.

SO until we see something in writing, we just continue to march.

[JohnH]

I tried Googling it several different ways, but never came up with anything.

[New York Enrolled Agent]

IRS just announced that we must have authorization or OK from the client to send in an extension. To send in an extension automatically without checking with the client is now a Cir 230 violation.

A few posters have asked but you still haven't let us know where the IRS announcement can be found.