Discussion:Invalidated Extension

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Discussion Forum Index --> Advanced Tax Questions --> Invalidated Extension


Discussion Forum Index --> Tax Questions --> Invalidated Extension

Jeff-Ohio (talk|edits) said:

1 May 2014
Huge debate amongst 4 firms regarding filing an extension in an effort to extend the period in which a benefit contribution can be made and then subsequently filing the extended tax return on time. 3 of these firm say this:

...if an extension is filed AND the return is filed BEFORE the ORIGINAL due date, e.g., 3/15 due date extended to 9/15 but the return is filed on 3/10, then the filing of the return invalidates the extension. If the extension is invalidated, then how can the payment be extended. What you provided below doesn’t change that premise. I also really don’t know if that’s correct or not, but we’re not going to take any chances.

...if payments are supposed to be made prior to returns being filed, what’s stopping someone from filing an extension AFTER a return is filed timely without extension, just to prolong the payment period. Kind of makes sense. I’m not totally clear. Hope all is well.

I've used the yellow box, RevRule 76-28, the private letter rulings and consulted with CK - I do not believe the filing of the return invalidates the extension. Am I wrong?

Jeff-Ohio (talk|edits) said:

1 May 2014
This is what I provided them with:

RevRule 76-28 provides that a deduction may be claimed for a contribution if made not later than the due date (with extensions) and the employer claims the contribution as a deduction on the tax return. There is no requirement that the contribution must be made by the date the tax return is filed if such date precedes the last date for filing the return. This rule is similar to the rule for IRAs which permits a deduction to be claimed on a tax return filed before April 15 even though the contribution is not made until April 15.

I.R.C. Sec. 404(a)(6) states that "a taxpayer shall be deemed to have made a payment on the last day of the preceding taxable year if the payment is...made not later than the time prescribed by law for filing the return for such taxable year (including extensions thereof)

Smokeytax (talk|edits) said:

1 May 2014
For what it's worth, the following is saying that filing the return doesn't invalidate the extension.

http://www.irs.gov/pub/lanoa/pmta00765_7275.pdf

Ckenefick (talk|edits) said:

2 May 2014
Jeff, I referred you to these citations: RR 66-144 and PLR 8336006 and RR 84-18.

You haven't really told us when the extension was filed. But if the extension is filed first and before the unextended due date, and then the return is filed second, also before the unextended due date, then the taxpayer has up until the extended due date to make the contribution. The extension is valid. Here's from RR 66-144:

the corporation obtained an automatic extension of 3 months for filing its income tax return as provided by section 6081(b) of the Code. Subsequently, but before March 15, the corporation filed its income tax return and paid all tax due thereon. Its contribution to the employees' trust was made on June 1.

Accordingly, the contribution made by the taxpayer in the instant case will be deemed to have been timely made for purposes of section 404(a)(6) of the Code.

And here's from PLR 8336006:

Form 7004 which was filed after Form 1120, but before due date of Form 1120, won't extend period of time for making deductible payments to pension-profit sharing plan

Makes sense to me.

Now be like a bird and migrate to the new forum. Nobody is over here anymore.

Jeff-Ohio (talk|edits) said:

2 May 2014
I know CK and your assistance was greatly appreciated. Having said that, I'm still arguing with the other firms.

As an aside, I'm holding on until midnight on May 31st.

I refuse to let go of this forum.

Spell Czech (talk|edits) said:

2 May 2014
Chris, for you to accept the totally unsupported, and, arguably, totally unsupportable, and very anti-taxpayer, assertion of that PLR is not like you. You cite it, and you even say that it makes sense to you; have you read it?

Jwebbb (talk|edits) said:

2 May 2014
Now be like a bird and migrate to the new forum. Nobody is over here anymore.

What new forum is that? How do I get there?

Frankly (talk|edits) said:

2 May 2014
Click here to get to www.taxprotalk.com.

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