Virginia Beach, VA (PRWEB) April 12, 2012
Through provisions of the IRS “Fresh Start” program, some new hardship measures may apply for qualified individuals who owe taxes this year. The IRS has announced plans for penalty relief on failure to-pay penalties, which are one of the biggest factors a financially distressed taxpayer faces on a tax bill. Liberty Tax urges those who have been unemployed for at least 30 days in 2011 or 2012, or self-employed persons who have suffered a 25% loss of business income in 2011 to see if the new “Fresh Start” provisions can help in these final filing days.
Filing Form 1127-A, Application for Extension of Time for Payment of Income Tax for 2011 Due to Undue Hardship, can help those who are unemployed and qualify by giving them an extra six months to pay without a penalty. This is only for an extension of time to pay, and would still require the Form 4868, Filing Extension of Time to File, to be filed also. Eligible taxpayers are given a six-month extension to fully pay 2011 taxes. Interest still applies from April 17, 2012 until the tax is paid but there will be no failure-to-pay penalty if the tax, interest and any other fees due are paid in full by Oct. 15, 2012.
In addition to the traditional installment payment plan, Form 9465-FS, Installment Agreement Request, is new this year as part of the new IRS Fresh Start Penalty Relief Effort. If using Form 9465-FS, the threshold for using an installment agreement without having to supply IRS with a financial statement can be raised from $25,000 to $50,000. Taxpayers who owe up to $50,000 in back taxes will now be able to enter into an agreement with IRS that stretches the payment out over a series of months or years. The maximum term has been raised to 72 months (6 years) from the current 60-month maximum (5 years).
“The main thing is to file on time. To limit penalty and interest charges, the taxpayer should pay as much of the tax due as they can when sending in their return,” suggested John Hewitt, CEO of Liberty Tax Service.
Individuals who owe a significant amount of taxes that the IRS believes is unlikely to be paid may qualify for an offer-in-compromise. The IRS has expanded the offer-in-compromise program that allows a settlement of the taxpayer’s tax liability for less than the full amount owed based on the individual’s current financial situation, income and future earning potential. Previously, the IRS determined the amount of the offer in compromise on the taxpayer’s earnings in prior years.
About Liberty Tax Service
Liberty Tax Service is the fastest-growing retail tax preparation company in the industry’s history. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service has prepared over 9,000,000 individual income tax returns. With 42 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation business, having also founded Jackson Hewitt Tax Service. The Liberty Tax website is http://www.libertytax.com. The Give Me Liberty! magazine contains more Liberty company news and information.