What you need to know about filing your taxes on Oct. 15th.

Filing for a tax extension?

-Article by Larry Holmes CPA. USC - Master of Business Taxation.

This is what you need to know:

  • Filing for an extension is normal. Most high-net-worth taxpayers, those with foreign investments and the self-employed almost always file for an extension on tax returns and submit paperwork to the IRS by October 15th.

  • Filing for an extension is perfectly legal and does not increase the risk of an audit. Audits are related to the complexity of the return and are not relevant to extensions.

  • Keep aware of deadlines involved with filing for an extension. Make sure your CPA can reach you so the tax filing process can be kept easy.

Tax Return. Tax Extension.

Tax day was April 18th. But for many financial and tax advisors, October 15th is tax day all over again. 

There are many reasons people apply for tax extensions, but the main one is the sheer complexity of certain returns. High-net-worth individuals generally have diversified investment portfolios and assets. The volume and variety of information that needs to be gathered on these returns make it virtually impossible to file an accurate tax return in April.

Filing a tax extension doesn’t mean you don’t have to pay at all until October. It gives you more time to file, but not more time to pay. If you live in America, you have to pay your tax liability by the April deadline whether you filed for an extension or not.

It is often necessary to file in October to ensure accurate tax returns. For example, if you are involved in 50 plus partnerships and investments, the likelihood of all those partnerships having their documents in perfect order by April are slim to none. Your CPA will use the data available to them from previous returns and predictions to make an educated estimate of your individual tax liability. As the year goes on, the information needed for accurate filing comes to light as your partnerships and investment entities provide documents to the IRS.

Self-employed individuals who also have a set retirement plan can request an extension if they are unable to make the required annual tax contribution before April. If they can’t pay in April, but know they can get the money together within the next 6 months, it makes sense to file for an extension. This way they gain the time they need to plan their contribution and get the deduction for the prior year.

Will you be at a higher risk of an audit if you file for an extension?

The answer is NO.

Tax return complexity is what increases the risk of audit. Complicated returns usually require an extension in order to be done accurately. Because of this, it may look like there is a correlation between extended filing and auditing, but this is a false assumption many have. The fact of extension does not equal increased risk.

There are penalties and allowances for extensions. If you don’t pay a percentage of your tax in April, or if the estimate you claim on your extension request is dishonest, your extension could be disqualified. This can result in having to pay interest on unpaid taxes from April onwards as you are technically filing late.

Most people who have filed for an extension are not the ones preparing their taxes. Typically people who file for extensions are letting tax professionals or CPAs handle their returns. These tax professionals can maximize deductions and track down obscure tax forms you probably have never heard of that will benefit you.

That being said, your CPA can’t do everything without you. You will need to provide information timely fashion in order to file easily by October 15th. It is important that you are aware of your own deadlines so you can provide the necessary documents to your CPA on time. It can be incredibly difficult to handle complex tax returns at the last minute. Your CPA likely has multiple returns they are handling so getting everything to them on time is important. One way to be first on your CPA’s to-do list is to ensure the documents are there to be handled as early as possible.

It is also important to remain available and communicative. Your CPA will have questions and if you are globetrotting without a cellphone or internet access he will be left in the dark. It’s imperative that you remain aware of deadlines and make sure your CPA can reach you around the October 15th deadline. If your CPA can’t get vital information from you, the results can be catastrophic.

The October tax extension is not a privilege reserved for the affluent. It is open to all Americans who need more time to file an accurate tax return. You can take advantage of this deadline as many Americans do, but you need to fully understand the requirements, risks, and rewards for doing so. If you are uncertain about whether or not filing an extension is best for you, consult your CPA. You can always contact us at Holmes & Associates and we will help you.

The popular opinion is that taxes are...well taxing. They don’t have to be. A good CPA, diligent planning and preparation can make for stress-free tax filing.

-Article by Larry Holmes CPA. USC - Master of Business Taxation.

Contact us today for a FREE CONSULTATION. Call now (562) 495-3331 or fill out the form below and we will get back to you within one business day.
*NOTE - We will never give your contact information out for any reason.

Name *

5 Myths about the IRS


Not all IRS agents are well versed in tax law and some agents are totally ignorant of certain statutes. If you are an unlucky soul being audited by a misinformed IRS agent you could wind up paying boatloads of money just because an IRS agent decided you should.

A couple of years ago, I received a phone call from a distressed business owner. He was being audited and pushed around by the IRS agent auditing him. It looked like he was going to have to pay a tremendous amount of unexpected tax fees. I agreed to help him out and attended the IRS audit as his new CPA. I listened to the IRS agent challenge my client’s tax return and I realized the agent was altering the tax law.

We got into a heated argument as the IRS agent could not see his mistake. The IRS agent wasn’t being malicious, he flat out didn’t know the tax law and was operating off incorrect information which he was using to attack my client. I demanded the IRS agent get me a copy of the Treasury Regulations. I found the exact line of tax law that applied to my client's situation and read it to the IRS agent.

The IRS agent didn’t know what to do. I told him to go check with another agent to see if I was right if he wanted to. He took the Treasury Regulations I had just read him and left the room to consult another agent. He was gone for 30 min. When he returned, he apologized to my client for his mistake. My client was given a no-change audit (an audit in which you have substantiated all of the items being reviewed and results in no changes) and didn’t have to pay any additional fees.

If my client didn’t call me for help, he could have potentially had to pay the IRS tens of thousands of dollars all because a random agent didn’t know the tax law. After dealing with the IRS for over 20 years, I can tell you the IRS doesn’t always know the tax law.


A lot of people see the IRS as a sort of evil demon out to get everyone. This isn’t true. The IRS is composed of humans beings like any other group. There have been countless instances where I have successfully gotten the IRS to grant my clients pardons or various other things not strictly in accordance with the way tax law is written.

I was representing a client in an “Offer in Compromise” (an IRS program which allows individuals with an unpaid tax debt to negotiate a settled amount that is less than the total owed to clear the debt) and I knew that the client situation was clearly not acceptable the way the tax law was written. I had a dead-bang loser case. There was no way I was going to get him off the hook and he was going to have to pay a lot of money.

So I took a different approach. Instead of magnifying the tax law, I made the case about my client as a person and his life situation. I presented a very “humanists story” and got the IRS to look at my client as an individual who was just trying to do good, ethical business and had gotten into a jam. We won our position! The IRS agent’s decision was not based on tax law but on understanding the taxpayer as a human being.

The IRS, like all groups, is made up of human beings and they have emotional responses just like everyone else which play into their decision-making process.


You can’t rely on the IRS for tax advice. Amazingly, their agents, websites, and resources are not the authority on tax law. IRS agent’s opinions on Tax Law bears no weight whatsoever! None, nada, zilch.

Call the IRS or use IRS websites for tax advice and the courts will laugh at you. You might as well solicit opinions from friends at cocktail parties. What the IRS says might be interesting, but the courts don’t care.

The best place for tax advice is from a qualified CPA. CPA’s are much more versed in the intricacies of tax law and are specialists in all manner of tax issues.


Many IRS agents think wealthy taxpayers should have to pay something just because they are wealthy. But, this opinion comes from individuals not the tax law and it isn't shared by all IRS agents just like it isn’t shared by all people.

That doesn’t mean I haven’t run into this before. I dealt with an agent the other day who said to me, “Your client should pay something and it is not fair that they are not paying something!” There was no legal reason why my client had to pay anything. I didn’t know what this agent wanted me to do. I wasn’t about to find a way to adjust my client's tax return to make him pay something.

The IRS agent’s viewpoint wasn’t based on any legal precedent and according to the tax law, my client didn’t have to pay anything. No matter how firmly this agent believed my client should pay, there was nothing he could do to enforce this. There is nothing in the tax code that says wealthy taxpayers have to pay solely because they are wealthy.


This couldn’t be further from the truth. The IRS is absolutely NOT your friend in an audit.

Many agents will do everything they can to put the taxpayer in the worst possible position in order to get more taxes. Their tactics can be very unpleasant and often difficult to counter if you aren’t experienced in dealing with them.

I walked into an audit one time and the agent started out by saying, “I know your client doesn’t have all the documentation needed, so let’s not bother looking at what you brought, save some time and start negotiating a settlement.” Fortunately for my client, we did have proper documentation much to the agent's dismay.

There are numerous ways to negotiate and get the IRS to back down, but they all start with the assumption that the IRS is not your friend.

For more information about the irs you can go to IRS.gov.

Learn more about Holmes & Associates, CPAs:

Holmes & Associates, CPAs has been in business for over 40 years and boast an elite team of tax professionals. Click HERE to learn about Long Beach’s Best CPA firm.

Need Tax Advice? Reach out now so we can help.