emporary regulations issued under IRC section 6081 (TD 9229, 11/4/05) simplify how individuals, partnerships and others can obtain an automatic six-month extension of time to file a number of income tax returns with a single request. The rules also remove the requirements for a signature and an explanation of the need for an extension, and render the use of certain other extension forms obsolete.
Generally, the temporary regulations are effective for certain returns due after 2005, so CPAs need to be familiar with them this filing season.
The timely submission of a completed application for extension on Form 4868, Application for Automatic Extension of Time To File a U.S. Individual Income Tax Return, now provides an automatic six-month extension, with no need for a signature or explanation. (Previously, a first extension request was good for four months; a taxpayer needed to file an additional request to gain two more months.)
As always, the extension does not extend the time for payment of tax. Taxpayers must make a proper estimate of any tax due. While no tax payment is required to obtain the extension, failure to pay any tax as of the original return due date may subject the taxpayer to penalties and interest.
CORPORATIONS AND OTHER ENTITIES
The new rules do not change the current method for filing extensions for corporate income tax returns; rather, they broaden its scope. The form previously used for a corporate extension (Form 7004, Application for Automatic Extension of Time to File Corporation Income Tax Return) will now also be used by partnerships, real estate mortgage investment conduits, certain trusts and taxpayers requesting additional time to file various excise, income, information and other returns.
The regulations have changed the title and appearance of Form 7004. Now called Application for Automatic 6-Month Extension of Time to File Certain Business Income Tax, Information, and Other Returns, the form will apply to a larger number of returns than did its predecessor.
Certain employee plan returns now are eligible for an automatic 2 12 month extension, and gift tax returns for an automatic six-month extension, if the proper form is filed. Neither extension request requires a reason or a signature. Donors who do not need an income tax filing extension will use a new version of Form 8892, Payment of Gift/GST Tax and/or Application for Extension of Time to File Form 709, to request the gift tax extension.
The temporary regulations are effective for applications for an automatic extension to file certain returns filed after 2005, and accordingly, apply to applications for extension to file tax-year 2005 returns. The new rules also apply to extension applications for tax-year 2004 returns for certain fiscal-year taxpayers whose returns are due after 2005. Although such taxpayers should continue to use the tax-year 2004 extension forms, the regulations’ preamble notes that the IRS will grant a six-month filing extension if the request made on one of these forms would otherwise qualify under the temporary regulations, except for use of the specified form.
For more information, see Shin, Tax Clinic, “Temp. Regs. Streamline Automatic Extension Procedures,” in the February 2006 issue of The Tax Adviser.
—Lesli S. Laffie, editor
The Tax Adviser
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