Tax Season Opens with Extended Deadlines & E-Filing Hopes

The Internal Revenue Service (IRS) has kicked off the 2006 tax filing season by announcing some extended filing deadlines, reducing the reporting workload for small businesses, and maintaining its high hopes for continued expansion of electronic filing.

The agency has changed this year’s filing deadline to April 17 because the traditional April 15 date falls on a weekend. However, some taxpayers in Maine, Maryland, Massachusetts, New Hampshire, New York Vermont and the District of Columbia will have until April 18 to file because of a conflict with a state holiday in Massachusetts, where the IRS has a processing facility for parts or all of those states.

In another change of deadlines, late filers who submit Form 4868 for extensions will have until October 16 to file. Previously, Form 4868 only gave filers a four month extension.

For small businesses, the IRS has issued temporary and proposed regulations for a new Employer’s Annual Federal Tax Return Form 944, which must be filed once a year , as opposed to the Form 941 that has had to be filed quarterly. The new form, for use by the approximately 950,000 employers with an estimated annual employment tax liability of $1,000 or less, will be posted on the IRS Web site at IRS.gov by January 31.

The form is also for used by new employers who expect to generate less than $1,000 in employment tax liability. For details call the IRS at 800-829-0115.

The most notable advantage is that most employers filing a 944 will be able to make a single payment with their annual returns as opposed to quarterly payments. “This is just one more burden reduction step the IRS is taking to make it easier for small business employers to comply with the tax laws,” said the agency’s Small Business/Self Employee Commissioner Kevin M. Brown.

Separately, the IRS expects e-filing, which was used by more than half of all filers last tax season, to grow still further this season. IRS Commissioner Mark Everson, in a press release noted that e-filing “is fast, secure and reliable.” The announcement also notes that electronic filers who have their refunds deposited directly into their bank accounts are getting their money within two weeks, or half the time that it takes when filing on paper.

Along with the e-filing push, the IRS has improved its Web site by launching or enhancing several preparation assistance tools. They include a 1040 Central link, which provides key forms, information on new tax code changes and answers to frequently asked questions, and separate links that help taxpayers and their preparers automatically determine if they are subject to the alternative minimum tax and whether they qualify for earned income tax credits.

The earned income tax credit assistance link has been redesigned to specifically help Hurricane Katrina victims determine which optional income to use. It is available in English and Spanish.

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