Due to the Enactment of the American Taxpayer Relief Act, some required tax forms could not be filed until after January. As a result, some people did not get the appropriate forms needed to accompany their tax return until after the April deadline. The Internal Revenue Service (IRS) announced it will waive the late penalty, typically 0.5 percent per month, for individuals and businesses that request an extension because of the delay. The provision can potentially help businesses who file for depreciation deductions and various business credits. If you are in this position, consider taking advantage of this provision. However, keep the following key points in mind.
- Make an official extension request. Don’t assume your late fees will be automatically waived. You need to properly request the extension for your 2012 returns.
- Estimated payments were expected on time. The late fee waiver does not mean you can just delay paying your tax return. The waiver simply means the IRS will not charge a late fee for the forms you will submit after the April deadline. These are forms that would usually accompany your tax return. You were still expected to estimate your tax liability and pay that amount by the original April 2013 deadline. If you did not, get it done quickly to avoid more penalties and interest.
- Abide by the extended deadline. The late forms and any additional tax due must be paid by the extended due date.
- Interest still applies. While the late fee is waived, the IRS is still charging interest on any payments made after the original April deadline.
A complete list of the forms eligible for this extension can be found at IRS.gov. While this provision is helpful to many individuals and businesses, it’s important to understand its requirements. We know how difficult it can be to navigate the tax system. This year has been particularly confusing with the introduction of new legislation and tax laws. Contact us for help filing an extension or for advice on next year’s tax planning.