critical date

[TAX4US]

A question was asked at a chamber meeting? I thought I would ask it here for responses. Return shows a refund. Other than certain elections how critical is the 10-15-2013 date? What do you think?

[RLymanC]

Due Date

Your info allows 3 years from due date to file for a refund. No penalties.

[DaveinTexas]

Why I think the due date is critical

A question was asked at a chamber meeting? I thought I would ask it here for responses. Return shows a refund. Other than certain elections how critical is the 10-15-2013 date? What do you think?

even if the return results in a refund is timely filing history goes a long way to abating future penalties. The IRS is less willing to work with the taxpayer to abate late filing penalties if they show a pattern of being late. Also, if the taxpayer has omitted income (oops, forgot the 401K withdrawal) the IRS will apply the late filing penalty to the additional tax as well as interest (CP2000 letter). This just adds insult to injury.

I can't tell you how many times a client is due a refund, forgets to tell me they had a loan default on a 401K or they took $20K++ out of their IRA, then here comes the CP2000 18 months later.

Always encourage the client to file timely if possible.

[JohnH]

I agree with Dave, and I always explain this to the client when one happens to file late. If there's a refund, then there is no penalty on the initial filing. However, it doesn't end there. The IRS has at least 3 years (and in some circumstances 7 years) to audit the return. If they find any issue which causes additional tax to be due, the late filing penalty of 5% per month on the unpaid balance (max of 25%) will be assessed at that time.

[ChEAr$]

Always encourage the client to file timely if possible.

Amen to that. NO extensions. No problems in October. Done by April 15th.