IRS Penalty Relief and Expanded Installment Agreements

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. 

http://www.youtube.com/watch?v=cny6o-ahhRU