Taxpayers who are struggling to pay their taxes may get some relief from the IRS’s expansion of its Fresh Start initiative, a program started back in 2008. New provisions provide penalty relief to the unemployed, while making installment agreements on taxes owed available to more people.
Normally, a ‘failure-to-pay’ penalty of one-half of one percent per month, up to a 25% maximum, is charged for overdue taxes. The ‘Penalty Relief’ initiative gives eligible taxpayers a six-month extension to fully pay 2011 taxes (that is, until October 15, 2012) before the penalty begins to apply. Interest of 3% will still be assessed starting from April 17, 2012.
The penalty relief is available to workers who have been unemployed at least 30 consecutive days during 2011 or 2012 and to self-employed individuals who experienced a 25% or larger reduction in business income in 2011 due to the economy. Restrictions apply: taxes due cannot exceed $50,000, and the penalty relief is not available to singles with adjusted gross income over $100,000 or to couples with income over $200,000.
The Fresh Start program also changes the eligibility threshold for streamlined installment agreements from $25,000 to $50,000 and increases the maximum term from five to six years.
For details or assistance, contact our office at (813) 514-8273 or email us at wrobelcpa@gmail.com.
