Internal Revenue Service to let some working class individuals pay later
Tax payers who experienced unemployment or other significant income cutbacks during 2011 are being extended a grace period before paying up this year. Eligible working class individuals will not incur fines, but interest is a different story. Article resource: IRS provides grace period to distressed taxpayers
‘Failure-to-pay’ penalties waived
Typically, the Internal Revenue Service levies 5 percent “failure-to-pay” penalties if working class individuals do not pay before the April deadline. Those fees increase the longer the taxpayer holds off payment, with a 25 percent cap.
However, due to the hardships of the economic downturn, the agency has decided to give some taxpayers a six-month grace period before they are charged. That will give them until mid-October to pay up.
Internal Revenue Service Commissioner Doug Shulman said:
“We have an obligation to work with taxpayers who are struggling to make ends meet. Our goal is to help people meet their obligations and get back on their feet financially.”
Program called ‘Fresh Start’
According to the bureau, this is just part of the 2008 “Fresh Start” program. They decided the recession made it harder for working class individuals, and the agency wanted to help.
Continue to get interest
However, those who qualify and delay payment until next fall will not get off entirely free. Their tax bill will still accrue interest over that period.
[Short term loans can hold off that tax burden]
Can you get in?
Any person who hopes to qualify for the program needs to be self-employed and have seen a 25 percent or more loss in business between January 1, 2011 and April 17, 2012. It is also there for individuals who had at least 30 consecutive days of joblessness during that time.
Also an income cap
Married working class individuals filing jointly who make $200,000 or more annually are ineligible for the payment delay. Single filers and heads of households cannot apply for the grace period if they make $100,000 or more a year.
To apply for the penalty-free grace period, working class individuals must file a Form 1127A. The form can be found at IRS.gov.
The IRS is offering further relief to distressed taxpayers in the form of installment plans. Some taxpayers with hardships are being allowed to spread out their tax obligation into more manageable periodic payments. The agency is allowing installment payments from some working class individuals owing up to $50,000, without filing an additional financial statement. However, those who owe over that must fill out a Collection Info Statement before being allowed to pay in installments.
The maximum period for payments to be paid off is six years, up from the previous limit of five.