Do not let tax liability force you to pay more than your fair share of taxes. The IRS has been providing special reliefs to people who have not been able to meet their tax obligations for the last few years.
The tax revenue authority body through its “Fresh Start” initiative is taking target at small business owners and the unemployed to meet revenue collection targets set previously.
According to Doug Shulman, IRS Commissioner, the agency has an obligation to work with struggling taxpayers in order to find a workable solution for both parties.
Every taxpayer should know that failing to file returns or to pay taxes on time will attract penalties which will increase their tax liability.
» Failure to file on time will result in a penalty of five percent per month of the unpaid taxes until the amount is fully settled.
» Failure to pay taxes will lead to a penalty of half of 1 percent of the unpaid taxes every month.
The good news is that the agency is giving a half-year grace period to some self-employed people and eligible unemployed people. During this period, these groups of taxpayers will not incur penalties for late payment or failure to file returns. However, taxpayers who fall into these two categories will have to fill out the IRS Form 4868 to ask for an extension.
Under the Fresh Start initiative, eligible taxpayers will have up to 15th October to pay their taxes. Self-employed individuals who have seen their income drop by more than 25 percent due to the economic crisis in 2011 can also qualify for this deadline extension.
- Bringing Down the Burden of Tax Debt – Offers in Compromise (2008taxes.org)
- Would You Like To Have the IRS Do Your Taxes? (2010tax.org)