IRS Penalty Relief and Expanded Installment Agreementsby Victoria Majors Jones, CPA on 03/07/12
As part of its “Fresh Start” initiative, the IRS announced today penalty relief for unemployed taxpayers and an expanded installment agreement program. (IR-2012-31)
The penalty relief portion of the program applies to the failure-to-pay penalty and is available to two taxpayer classes (and is subject to AGI limits):
- Taxpayers who have been unemployed for any period of 30 consecutive days or longer at any time in 2011 (or in 2012 up to April 17); and
- Self-employed individuals who experienced a reduction of 25% or greater in their business income in 2011 relative to 2010.
To obtain penalty relief, a taxpayer must do three things:
- File the return by April 17, 2012, or obtain an extension and file by October 15, 2012;
- File Form 1127-A by April 17, 2012, regardless of whether the return is extended; and
- Pay taxes due by October 15, 2012..
In addition, the IRS has broadened installment agreements by raising the threshold for simple installment agreements from $25,000 to $50,000.
Here is a video explaining more about the program.