No, filing a tax extension does not increase the risk of being audited. And then there are all the stories about auditing risk. Some people say expansion increases auditing risk, while others say the opposite. There seems to be no hard evidence to prove either theory.
However, it should be noted that there is no evidence that there is an increase in auditing risk if the extension is chosen. In fact, on the contrary, given all the advantages of an extension, it can be argued that an extension can help reduce auditing risk. Of course, all taxpayers care about their auditing risk. Opinions vary, and there are many stories from old women about what triggers an audit.
A tax extension gives you more time to file your federal taxes. It can be an invaluable tool to help you manage your budget while meeting your tax obligations. In some cases, it may even be a necessity. But does requesting a tax extension increase the risk of being audited? Here's what you need to know about the relationship between tax increases and tax audits, so you can explore your options more safely and successfully.
Requesting a tax extension won't make you the target of IRS audits. . With millions of people requesting tax extensions every year, there's no reason why you shouldn't get an extension for yourself. Like everyone else, the IRS has deadlines.
If you file a tax return with potential problems, federal law requires the IRS to conduct an audit within a specified time frame. The IRS can only extend the deadline for specific reasons, even if the taxpayer consents to the extension. As contradictory as it may seem to help the IRS, there may be good reasons to give the IRS your consent to an extension. Continue reading to discuss when it might be beneficial for you to grant the IRS an extension of your audit, and contact a Texas IRS auditing attorney if you have any questions or if you need help with an IRS tax problem in Dallas or Tyler, Texas.
When you electronically file your tax extension, you'll receive a confirmation email as soon as the IRS approves your request. While no one outside the IRS can say with certainty how the auditing selection process works, it can be safely said that a tax extension does nothing to initiate an audit. If the IRS audits a tax return and determines that there is an additional tax liability, it must generally process the tax assessment within the same time period. In addition, you may discover that there are other auditing issues that really favor you and that could overturn a proposed tax assessment or even cause a delayed refund.
So, you must pay before April 15 what you expect to owe when you file your taxes later in the year, any time until October 15. The simple and comforting fact is that the IRS will most likely not care if you ask for a tax extension. Many people are mistakenly led to believe that there is a direct relationship between tax extensions and tax auditing, or that a tax extension is a warning sign for the IRS. If you don't file your North Carolina state taxes on time because you've received an extension to file your federal taxes, you may incur fines and other penalties.
However, many experienced certified public accountants (CPAs) and financial planners have observed and analyzed IRS patterns and actions over the years and have concluded that requesting a tax extension will probably not affect your auditing possibilities. In accordance with the evaluation law, the IRS generally has three years from the due date of the return or the date it was actually filed to file an audit. You may not need all that time and, once extended, you can apply anytime between April 15 and October 15. Many members of the financial community debate whether this is true or not, but most experts agree that the IRS is unlikely to select you for a tax audit to request an extension. .