Are late filers setting themselves up for audit?

Fall is by far my favorite time of year. The leaves are turning, the weather is cooling, baseball playoffs are in full swing... It seems nearly perfect -- until you remember that you haven't yet filed your taxes.

While the majority of taxpayers file their tax returns on time in April, more than 10 million taxpayers (just more than 7% of the total number of filers) will file in October. Those are taxpayers who elected to file an extension by the April 15 deadline.

To file an extension, you simply complete a federal form 4868 with your name, address and tax ID information, along with an estimate of any taxes that you might owe. Assuming that it's timely filed in April, applications for extension are granted automatically by the IRS for a period of six months, no questions asked.

It's ridiculously easy. So much so that many taxpayers are hesitant to file for an extension because of the perception that an extension will trigger an audit. After all, they wonder, surely the IRS will assume that your failure to file in April is somehow indicative of bad behavior. Those taxpayers believe that filing is extension (especially if you do it year after year) is the equivalent sending the IRS a personal "audit me" invite.

The statistics, however, don't bear that out at all. Statistically, your chances of getting audited are fairly low to begin with: about 1 in 150. Certainly greater than your chances of getting hit by an asteroid (1 in 500,000) but less than dying in a car accident (1 in 100).