Federal Lawmakers Approve Taxpayer Friendly Extenders
Cognizant of the benefit that some tax credits and deductions have already provided to taxpayers, federal lawmakers recently made some tax extenders permanent. Even the name of the legislation is revealing: the Protecting Americans from Tax Hikes Act of 2015. The legislation makes certain credits and deductions permanent, such as the enhanced Child Tax Credit, the Earned Income Tax Credit, Section 179 expensing and others.
Temporary tax deductions, credits or other provisions are one area that can be confusing to taxpayers, in particular. If a return erroneously reflects a provision that has not been extended, a taxpayer may well find that his or her return has been flagged for an audit.
Although the Internal Revenue Service does offer extensions to certain filing deadlines, they often come with a catch: interest on any taxes owed will accrue until paid. In fact, a taxpayer may even owe penalties, in spite of seeking the extension request.
Nevertheless, the benefit of filing correct paperwork the first time around, even if late, can spare the heartache of a tax return dispute. An electronic red flag might trigger an IRS audit of a tax return, and the resulting inquiry may greatly exceed any costs of a mere extension.
Our law firm focuses on tax controversies and has helped many clients who are apprehensive of communicating with the IRS. We understand that a tax problem is not necessarily synonymous with tax litigation. Indeed, a proactive approach to communications with the IRS may result in a positive outcome without having to resort to court.
Source: Accounting Today, “Congress Makes Some Tax Extenders Permanent,” Michael Cohn, Dec. 16, 2015
