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Rep. Judy Chu, D-Calif. (Photo: House)

Regulation and Compliance > Federal Regulation > IRS

New Bipartisan Bill Could Help Tax Extension Filers

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A Democrat and a Republican in the U.S. House are trying to help people who file their federal income taxes late.

Rep. Judy Chu, D-Calif., and Rep. Mike Carey, R-Ohio., have worked together to introduce H.R. 3566, the Simplified Automatic Filing Extensions Act of 2023 bill.

The bill would change the rules individuals use when sending the IRS estimated tax payments along with requests for filing deadline extensions. Instead of having to use an IRS tool to come up with a “properly estimated” tax liability figure, a filer could simply send in a payment for 125% of the amount owed the previous year.

The bill has the support of the Association of International Certified Professional Accountants.

What It Means

For financial professionals working with disorganized clients, or clients with complicated finances, the bill could make it easier to keep them from panicking as April 15 approaches.

For agents and advisors with a general interest in Congress, the bill could lead to rumination about what kinds of provisions could eventually show up at the end of a debt limit increase bill.

Automatic Extensions

Individuals and couples can use Form 4868 to apply for automatic extensions of the individual tax return filing time.

Published details on Form 4868 filing volume are scarce. In 2008, for example, when the IRS revised regulations related to Form 4868, it indicated that it did not believe it had to put the revisions through a federal Paperwork Reduction Act review and did not provide filing or processing statistics.

The IRS estimates in a discussion of its filing season statistics that about 10% of taxpayers ask for extensions, and that the returns that come in late typically account for about 20% of tax payments.

H.R. 3566

Chu and Carey said when introducing their bill that it should save taxpayers who will file their returns late hours of tax estimation calculation work.

In some cases, the lawmakers predicted, the bill could save taxpayers from the penalties that the IRS can impose if it feels the amount a taxpayer paid along with a Form 4868 is inaccurate.

“Requiring taxpayers who need an extension to calculate their often-complicated taxes twice in a year is repetitive and burdensome,” Chu said.

Chu is a member of the House Ways and Means Committee.

At press time, the full text of the bill was not available.

Rep. Judy Chu, D-Calif. (Photo: House)