The IRS announced on March 7, 2012, IR 2012-31, a major expansion of its “Fresh Start” Initiative to help struggling taxpayers by providing penalty relief to the unemployed.
A six-month grace period on failure-to-pay penalties will be made available to certain wage earners and self-employed individuals. The request for an extension of time to pay 2011 taxes will result in relief from the failure to pay penalty if the tax, interest, and other penalties are fully paid by October 15, 2012. This relief will be made available to wage earners who have been unemployed for at least 30 consecutive days during 2011 or in 2012 up to April 17, 2012 and to self-employed individuals who experienced at least a 25% reduction in business income in 2011.
A qualifying taxpayer’s income must not exceed $200,000 if he or she files as married filing jointly or not exceed $100,000 if filing as single or head of household. In addition, the amount of the balance due the IRS cannot exceed $50,000.
Taxpayers meeting the eligibility criteria will need to complete Form 1127A to seek the 2011 penalty relief.
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