The IRS is quite liberal when it comes to granting 6-month filing extensions for federal income taxes. While this extension does not provide taxpayers with additional time to pay tax liability, it does provide extra time in which to submit tax returns. Taxpayers must file extensions in a timely fashion if they are to avoid fines and penalties from the IRS.As taxpayers know, taxes are due at both the state and federal level. Many taxpayers find it necessary to request an extension to file their state taxes. Those who file for an extension at the state level only must submit a Form 204 to the Arizona Department of Revenue. However, Arizona residents who submit a filing extension for federal income taxes are not required to submit Form 204 to effectuate a state extension. This is clearly illustrated on Form 204 itself, which states in relevant part: “Arizona will accept a valid federal extension for the period covered by the federal extension. This includes the automatic six month federal extension.”
Despite the clear language of Form 204, the Arizona Department of Revenue issued late filing penalties this year to many Arizona residents who submitted timely federal extensions. Many taxpayers were issued penalties for hundreds of dollars without cause. This no doubt came as a shock to those who filed federal extensions in the past without raising issue with the Arizona Department of Revenue. Likewise, those who relied on Form 204 have good reason to be dismayed by the late filing fees. The fact of the matter is that the Arizona Department of Revenue must abide by its standing policy of extending state filing dates by the length of the extension granted at the federal level.
Arizona residents cannot be fined by the Department of Revenue for late filing if they submitted a timely request for a federal extension. If the IRS granted you an extension and you nevertheless received a penalty from the Department of Revenue, contact JacksonWhite to determine your best course of action. If you have already paid a fine to the Department of Revenue, which you believe was without basis, redress may be available. Contact JacksonWhite to discuss the facts of your situation in detail.