The Internal Revenue Service is reminding taxpayers that “quick and easy solutions” are provided for those who can’t file their returns by the April 17 deadline or pay their taxes on time.
And relief can be requested online.
Tax-filing extensions are available to those who need more time to finish their returns.
Keep in mind, however, this is an extension of time to file – not an extension of time to pay.
Nonetheless, taxpayers who are having trouble paying what they owe usually qualify for payment plans and other relief.
Last month, the IRS announced penalty relief for unemployed taxpayers and self-employed individuals whose income has dropped as part of its Fresh Start initiative.
Either way, taxpayers will avoid stiff penalties if they file either a regular income tax return or a request for a tax-filing extension by this year’s deadline.
Taxpayers should file, even if they can’t pay the full amount due.
Here are further details on the options available.
Taxpayers who have finished their returns should file by the regular April 17 deadline, even if they can’t pay the full amount due. In many cases, those struggling with unpaid taxes qualify for one of several relief programs, including those recently expanded under the IRS “Fresh Start” initiative. These include the following:
- Most people can set up a payment agreement with the IRS online. Those who owe $50,000 or less in combined tax, penalties and interest can use the Online Payment Agreement to set up a monthly payment for up to six years. Taxpayers can choose this option even if they have not yet received a bill or notice from the IRS. Alternatively, taxpayers can request a payment agreement by filing Form 9465-FS. This form can be downloaded and mailed along with a tax return, bill or notice.
- Most unemployed filers and self-employed individuals whose business income dropped substantially can apply for a six-month extension of time to pay. Eligible taxpayers will not be charged a late-payment penalty if they pay any tax, penalty and interest due by Oct. 15, 2012. Taxpayers qualify if they were unemployed for any 30-day period between Jan. 1, 2011 and April 17, 2012. Self-employed people qualify if their business income declined 25 percent or more in 2011, due to the economy. Income limits and other special rules apply. Apply using Form 1127-A.
- Some struggling taxpayers may qualify for an offer-in-compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Generally, an offer will not be accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay.