Extension vs Amendment
Hello:
If a business owner wants to fund a SEP for 2011 can he amend his return and make the contribution. I realize he/she needs an extension, but what if another tax item needs to be corrected. Would that be allowed? I think not, but wanted to get some consenus and look for a reference that makes the distinction between “extension” and “amendment” clear.
Thanks.
Permalink Submitted by Alan Spross on Fri, 2012-05-25 04:32
The “extended due date” is an automatic election the taxpayer can make if he either filed a timely extension OR filed a timely tax return (by 4/18/2012). In this case when the business owner amends his return he should clearly state “filed pursuant to Sec 301.9100-2” on the top of the 1040X. This statement tells the IRS that the SEP contribution was made by 10/15/2012 AND the original return OR an extension had been filed on time. Therefore, there is no need to find another unrelated reason to amend the return.
Copied from the IRS Manual:
>>>>>>>>>>>>>>>
(b) Automatic 6-month extension. An automatic extension of 6 months from the due date of a return excluding extensions is granted to make regulatory or statutory elections whose due dates are the due date of the return or the due date of the return including extensions provided the taxpayer timely filed its return for the year the election should have been made and the taxpayer takes corrective action as defined in paragraph (c) of this section within that 6-month extension period. This paragraph (b) does not apply to regulatory or statutory elections that must be made by the due date of the return excluding extensions.
>>>>>>>>>>>>>>
In summary, the captioned Sec provides for an automatic election to make the SEP contribution. This also applies to correcting excess IRA contributions or recharacterizing an IRA contribution or conversion and is noted in Pub 590 on p 46. Therefore, when the SEP contribution must be made by the “due date including extensions”, this means that the taxpayer needs to be eligible for the automatic election. It does not mean that the taxpayer must have filed an extension if he otherwise filed on time.