IRS employees are not allowed to file an extension. How do you correct an inadvertent filing of an extension for an IRS employee? Should the preparer write a letter to the IRS?
Filing the return before the deadline would nullify any extension.
If there is any penalty to the employee for someone else's actions, then that person should rectify the situation with the employee.
As a preparer, you followed the instructions of the client**. The client needs to address this with their manager or compliance office. I agree that filing on time would more or less negate the issue.
**As a preparer, you are required to exercise due diligence, and not do something you know you shouldn't. I wonder if it is standard in your industry for the due diligence questionaire to included "Are you an IRS employee?" If that is not a typical question and you followed the industry standard practice, then you should be ok.
This is incorrect. IRS employees are allowed to file an extension as long as they pay the tax due.