This year taxpayers will get a chance to participate in a new IRS program designed to help those who cannot afford to pay their tax debts. Deemed the Fresh Start initiative, the IRS is granting eligible taxpayers two new ways to manage their tax debts this season.
Don’t Forget The Form
The IRS will be working harder than usual this year to provide taxpayers with help paying their tax bill. First, taxpayers may be able to file an extension on their taxes, giving them until October 15, 2012 to pay their taxes. This extension provides more time than the traditional extension, allowing for more time to review tax liabilities or save up the money to pay the debt. In order to apply for this extension, taxpayers must complete the program Form 1127A and the extension Form 4868 by April 17, 2012. Failure to file the form by the deadline could result in interest fees and penalties from the original due date of the taxes.
Second, the taxpayer can obtain a waiver of the failure to pay penalty up until the October 15 deadline. Normally, this penalty can apply a 1/2 of 1% penalty fee on the unpaid balance, increasing by a 1/2 a point each month. Waiving this fee can save the taxpayer 3% in penalties. Qualifications for this program require that the taxpayer (a) have been unemployed for at least 30 consecutive days during 2011-April 17, 2012 or (b) be self employed individuals who experienced a 25% or more reduction in business income due to the economy.