I’ve been having issues with clients who take the automatic two-month extension. As I learned years ago, a taxpayer outside of the United States on April 15th gets two extra months to file his return. This is noted in Treasury Regulation 26 CFR § 1.6073-4 (b):
Citizens outside the United States. In the case of a United States citizen outside the United States and Puerto Rico on the 15th day of the 4th month of his taxable year, an extension of time for filing the declaration of estimated tax otherwise due on or before the 15th day of the 4th month of the taxable year is granted to and including the 15th day of the 6th month of the taxable year. For purposes of applying this paragraph to taxable years beginning prior to January 1, 1964, Alaska shall be considered outside the United States.
That seems pretty specific to me. Given the reference to Alaska it’s pretty clear this regulation has been on the books for a long, long time.
It’s also noted in the Internal Revenue Manual. IRM 3.11.3.5.7.3 states:
Edit CCC “N” when the taxpayer is qualified for an automatic two-month extension. A taxpayer qualifies for this special extension if-on the date his/her return is due-the taxpayer meets any of the following criteria:
• Indication the taxpayer lives outside the U.S. and Puerto Rico and main place of work is outside the U.S. and Puerto Rico
• Indication the taxpayer is on military or naval duty outside of the U.S. and Puerto Rico
• Indication of taxpayer “abroad” or “overseas”.
• APO/FPO/DPO address. [emphases added]
I reported this as a systemic issue, and the IRS, after investigating, agreed. However, this got referred up the line and a supervisor told my contact in the systemic issues group that the two month extension apparently doesn’t exist; that it was eliminated when IRC §6073 was repealed in 1984. I pointed out to my contact both the regulation and the IRM. My contact didn’t know what the impact was on a regulation when the overlying code section is repealed. I said that since the regulation is still on the books, and regulations do carry the force of law, it’s valid. She said she’s referring this back to the supervisor along with the regulation and the IRM section.
In any case, it’s another step backwards after what I thought was a step forward. Meanwhile, to date all my clients who have been hit with erroneous penalties have had them removed…eventually.
Tags: Two.Month.Extension