There may be relief available to you. The Internal Revenue Service has expanded its “Fresh Start” initiative to help taxpayers who owe. The Fresh Start Penalty Relief Initiative gives eligible taxpayers a six-month extension to pay their 2011 taxes. You are eligible for an extension of time to pay your income tax for 2011 if you meet the following requirements:
1. Your income tax liability for 2011 is less than $50,000
2. Your adjusted gross income is less than $100,000 for single, married filing separate, or head of household ($200,000 for joint filers)
3. You are experiencing economic hardship and need a six-month extension to pay because either
a. You or your spouse (if filing joint) was unemployed for at least 30 consecutive days during 2011 or 2012, prior to April 15, 2012, or
b. You are self-employed and you suffered a 25% or greater reduction in business income in 2011 (relative to 2010).
Interest still applies from April 15, 2012 until the tax is paid. However, the failure-to-pay penalty will not be charged. The extension of time requires you to pay the full amount of tax, interest, and penalty (other than failure-to-pay penalty) on or before October 15, 2012.
The application for an extension of time to pay is made by completing Form 1127A. Your application must be postmarked on or before April 17, 2012. The Form is not sent with your tax return, it is separately filed with the IRS depending on your State of residence. The IRS will notify you only if your application is NOT approved.
Wondering if you qualify for the Fresh Start Penalty Relief Initiative? For more information post a comment below or contact our Tax Planning & Preparation group at 440-449-6800.