Is it April 15 all over again? Not quite, but more people are filing extensions each year and, as the Oct. 15 extension deadline approaches, it feels like a second tax season, says Scott McGovern, a shareholder.
"Reflecting national trends, we've definitely seen an increase in extensions among our client base," said McGovern.
While available to all taxpayers, McGovern explains that the six-month extension to officially file one's taxes is not automatic; a request must be made to the IRS.
"Taxpayers have to complete IRS form 4868 on or before April 15, the traditional tax deadline, to get the six-month reprieve. The form also requires that taxpayers estimate their tax liability and pay any amount due at the time the extension is requested," McGovern said. "So an extension is not a cost saving strategy."
McGovern says there are a variety of reasons taxpayers file for an extension.
"Taxpayers may file for an extension because they are waiting on additional information from corporate entities or partnerships in which they are owners or members; they may be out of the country or traveling and don't have access to all of their information to file a return by April 15; they could be going through a personal or business hardship and require additional time to gather all of their tax information; or they could just be missing some key piece of information and are working to obtain it," McGovern said.
McGovern believes there are more extensions at his firm and across the country because the income tax code is becoming increasingly complex; he dispels as myth the notion that filing an extension puts a bullseye on the taxpayer's back.
"There's a greater comfort level that going on extension will not increase one's chances of an IRS audit," McGovern said. "That was never true, but it became urban tax legend, I guess, and is gradually fading away."
While the extension option may be a convenience for taxpayers - and keeps CPAs busy almost year round with tax work - McGovern says it is a valid option for many taxpayers who are in a situation that just doesn't allow them to complete their tax return and have it filed by April 15.