DEADLINE is Wednesday for taxpayers who got four-month filing extensions

WASHINGTON (AP) _ Time is up for millions of people who have four-month extensions from the IRS to file their income tax returns. <br><br>About 8 million taxpayers got the automatic extensions that expire

Tuesday, August 14th 2001, 12:00 am

By: News On 6

WASHINGTON (AP) _ Time is up for millions of people who have four-month extensions from the IRS to file their income tax returns.

About 8 million taxpayers got the automatic extensions that expire Wednesday. A further, two-month extension is available from the Internal Revenue Service for people with special hardships, such as an illness, a fire that destroyed records or a business failure.

``Some people just don't want to do it and they're putting it off,'' said Brenda Schafer, senior tax research coordinator at H&R Block. ``You can get away with it the first time, but the second time you have to have a reason.''

Still, the IRS projected that about 2.3 million taxpayers would ask for a second extension to Oct. 15.

Returns must be postmarked Wednesday to meet the four-month extension deadline, or they can be electronically filed by midnight, IRS officials said. A second extension request also must be postmarked Wednesday using IRS Form 2688.

Procrastinators who owe tax are risking a late payment penalty of one-half of 1 percent of the unpaid balance monthly and a late filing penalty of 5 percent monthly, plus interest currently running at 7 percent.

``It can get really nasty,'' Schafer said.

There's another reason this year for laggards to file their returns: The IRS needs the information on those returns to send qualified taxpayers their tax-cut checks. The checks of up to $300 for single taxpayers, $500 for heads of households and $600 for married couples are based on 2000 tax returns that were initially due in April.

Schafer said there is a misperception among many taxpayers that the tax cut checks will somehow result in higher taxes or smaller refunds than people would otherwise get next year.

When Congress decided to make the new 10 percent rate retroactive to Jan. 1, lawmakers had to choose how this year's benefits would find their way to taxpayers. They had three options:

_Lower the amount withheld from paychecks.

_Create a tax credit for the returns filed next spring that would either add the money to refunds or lower the tax owed.

_Give people lump sum checks this year.

Congress chose the last option as an economic stimulus and for the political benefits of millions of government checks reaching the nation's mailboxes. The checks have no effect on the tax that would otherwise be owed or the refund a person might expect next year.

``There's no increase in tax here,'' Schafer said. ``You're just getting it sooner. Would you rather wait or get it now?''