Is IRS Tax Extension 2009 an "Invitation" For Tax Audit?

Filing for an IRS tax extension in 2009 is easy. It's legal, and most importantly, tax extension does not initiate tax audit.

There is a simple form which allows you to apply for a six month IRS tax extension in the year of 2009 to file your tax return. It's called Form 4868 and it is very easy to fill in. You can do it on your own; there is no need to take even the help of an accountant.

The Form asks you basic details - your name, address and social security number. It also asks you to estimate the tax liability and in case any balance is due you are required to send it along with the Form. By making this payment if you are discharging 90% of your tax liability, then there is no worry at all. You are not subject to a late payment penalty or a late filing fee even.

The Form is available very easily. Either you can take it from one of the IRS offices or you can order it by dialing the number 800-TAX-FROM (800-829-3676). At the time of filing the Form you will need information about your income tax return.

You can file this Form online. On filing this Form you will get an acknowledgment.

You must see that you file this form before the due date of your return. You will get automatic tax extension. And most important thing is you need not give IRS indeed any reason for filing a tax extension. So even if you're lazy or you don't want to think about filing that can be a valid reason for you!

Form 4868 will give you time up to October 15 to prepare and send your return. This tax extension application is not for the payment of money! You must pay your money before April 15 if you think that is due to the government.

You can ask for an IRS tax extension only once. No more extensions thereafter. You must file before October 15.

The consequences of not filing an IRS tax extension are worse. If you are unable to file for an extension, it can hurt you. The IRS can slap a late filing penalty which is five per cent per month of the tax unpaid by the due date. And on the top of this there is a penalty for paying late.

The late payment penalty may be waived if you can show a reasonable cause for nonpayment. If 90 per cent of your actual tax liability is paid before the due date and you may be considered to have a reasonable cause. In any case you will be required to pay interest on the tax which is unpaid by the due date. This interest will continue until you pay the tax. Even if you say that you have a very good reason for non-payment, still this interest is charged and recovered by the IRS.

Then there is one statute of limitation. It limits the power of IRS to audit your return. It gives the IRS three years. So for filing the return for 2006 which is due on or before April 15, 2007, the limitation date is April 15 to 1010. If IRS is unable to audit you within this period, then it is prohibited from challenging the deductions you claimed. The only cause for taking action beyond this date is if the IRS is successful in proving that you have committed a fraud. But then the burden of proof lies always on IRS. It must prove that you had the intention to cheat.

If you file an IRS tax extension application then the statute of limitations begins from the actual filing date of the return and not from the date of filing the extension.

If you are abroad

If you are a citizen of U.S. or a resident and you're out of the country on the due date for filing the return, you'll get automatic extension of two months for filing your return. You need not file Form 4868.

Therefore, remember that filing an IRS tax extension is normal and does not initiate tax audit.

Chintamani Abhyankar is internet marketer, tax professional and freelance writer. He has done a lot of research on tax systems and is advising people internationally on various aspects of tax planning over last 25 years. His masterpiece, Stop donating your money to IRS is an e-book on the tax secrets which only lucky people knew in the past. His easy to implement strategies can put thousands of dollars in your pocket. Grab a copy now!