Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Does ObamaCare forbid extensions?

Posted by taxguru on March 31, 2015

With all of the discussion over the past few years about what a steaming pile of crap the 2,200 page ObamaCare legislation is, I had never heard of it denying anyone the ability to file for an extension of time to file their income tax returns…until a few days ago.

As has been the case for the past few decades, we only fully complete about five to ten percent of our individual income tax returns by April 15, with most clients opting for the more relaxed pace of filing for a six month extension of time.  Those clients who do insist on having their returns finished by April 15 have been given a deadline of March 1 to submit all of their forms and data.  It thus surprised me to read the following note that a married couple client on the Left Coast sent in with their tax return package almost four weeks after the March 1 cut-off.

I received an email from our Covered California representative reminding us that our tax returns
must be filed by 4/15/15.
I hope this won’t be too big a problem.
Very sorry for the short notice.

While I don’t like the added pressure during Tax Season, I normally try to accommodate client rush jobs, when the reason is legitimate, such as for a loan application or a child’s college financial aid. However. this didn’t feel right; so I sent the clients an email about it.

Your stuff looks complete. The only concern I have is with the new ObamaCare Form 1095-A.  As I covered in my blog a short while ago, it was announced that the Calif healthcare exchange sent out incorrect 1095s to something like 800,000 people.  Have you verified that the ones you sent me are accurate?  Neither one has the “Corrected” box checked.

Which brings me to the due date of your tax return.  Today, as well as the past few days, when clients have told us that they are just now sending in their 2014 info and are assuming that we can get their returns done by April 15, we laugh ourselves silly.

There is something very fishy about what you were told, or you may have misunderstood them.  I have not heard of anyone else anywhere in the country being ordered to file their tax returns by April 15 and not being allowed to file for extensions.  You are the very first person to mention such a demand, and I read a lot of other tax discussion boards.  This should have come up somewhere if it were a legitimate requirement.  That just doesn’t seem fair or legal for them to require that, because there are literally hundreds of reasons people may need more time to assemble all of their tax return data.  In fact, after my recent heart problems, we signed up for ObamaCare and they haven’t mentioned any need to file our 1040 by April 15; which is good because we are going on extension.

However, if you can verify that the 1095s you sent are accurate, we will try our best to get your returns done by April 15.  I don’t want to have to prepare an amended return if it is later discovered that the 1095s are incorrect, because IRS often audits amended returns, and I’m sure you don’t want to have to go through another IRS audit.

I hope this isn’t too confusing for you and I’m not trying to be a troublemaker.  I’m just trying to look out for your best interest and it always bugs me when people are given incorrect tax advice.

Let me know if you have any questions and have verified the accuracy of the 1095 forms.

Thanks for your help with this.

Sherry added this comment to the client:

Please forward Kerry that E mail you got from Obamacare.  He thinks you must be misreading it. This is the first we’re hearing about this! It could be a scam because they were telling people to hold off on doing tax returns by April 15th themselves.

The wife replied with the following

Thanks for the info Kerry.  The 1095-As that he sent are the only one we received.  The numbers match the totals of the checks I wrote so I think the 1095-As are both correct.
Please go ahead and file the extension.

and she also forwarded the email she had been referring to, which included the following regarding the issue of extensions

Can I File an Extension if I Received Subsidies?

Posted: 23 Mar 2015 03:33 PM PDT

Question: If you have already been getting the credit, is the 4/15 2014 tax filing deadline firm that covered ca makes you agree to, or is an extension allowed until 10/15/15? what is the final consensus? thanks
Answer: You will meet that requirement when you file a tax return on 4/15/15 along with your application for an extension. In other words, even though you are filing for an extension, you still have to file a return on April 15th.

My response:

Thanks for sending me a copy of the Covered Calif Q&A.  I now understand the source of your confusion about needing to file the actual tax return by April 15.

The response to the question about extensions makes absolutely no sense and must have been written by a bureaucrat who had been  partaking of a little bit too much medical marijuana.  Nobody files both an extension and a tax return on April 15.  It’s one or the other.

We will send you a copy of the April 15 extension and will prepare the actual returns as soon as we can after the April 15 crunch.

Thanks for your help with this.

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