This is actually a Circular 230 question.  The work products of your tax preparation (i.e. the tax return and your workpaper) belong to you and you can withhold them until the payment due is made.  You need to, however, fully and clearly inform your client of the consequences so that there is no misunderstanding in how the return and extension would not be filed.

Having said that, your client already has a copy of the return.  There is nothing that could prevent him/her from paper-filing that return you prepared (if it's not watermarked) or by just copying the entire return.