IRS announced a new relief program under its “Fresh Start” initiative. Unemployed taxpayers and some qualified self-employed can take advantage of this relief program. (IR 2012-31).
What Kind of Relief Can You Get and Who Qualifies?
According to a recent post on the IRS website: You can relief from the failure-to-pay penalty and is available to two taxpayer classes. Please note it is subject to your AGI limits.
- Taxpayers who have been unemployed for any period of 30 consecutive days or longer at any time in 2011 (or in 2012 up to April 17); and
- Self-employed individuals who experienced a reduction of 25% or greater in their business income in 2011 relative to 2010.
What can you do to get this relief?
- File the return by April 17, 2012, or obtain an extension and file by October 15, 2012;
- File Form 1127-A by April 17, 2012, regardless of whether the return is extended; and
- Pay taxes due by October 15, 2012.
Does this cover all penalties and interest?
No, You are still subject to other penalties and interest. Also note that the failure-to-file penalty will still be in effect, so taxpayers must timely file. We recommend you contact your tax professional in advance to make sure what kind of relief you can qualify for. As always, you should avoid having to deal with IRS penalties and interest.
One more good news for those who do plan on paying taxes late this year?
IRS has also introduced a new threshold for simple installment agreements from $25,000 to $50,000. You can learn more about this program by visiting the IRS website.