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E-Pay Options Available to People Facing April 17 Deadline; Penalty Relief for Unemployed Taxpayers; Expanded Payment Plans for Those Who Can’t Pay
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Fresh Start
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April 17th Tax Deadline English | Spanish
WASHINGTON — The Internal Revenue Service reminded taxpayers that 2011 federal income tax returns, extension requests and tax payments are due by April 17, 2012. For people unable to pay their taxes in full by that date, payment agreements and other relief are usually available and can even be requested online.
Taxpayers will avoid late filing penalties if they file either their income tax return or a request for a tax-filing extension by midnight on Tuesday. The late-filing penalty, normally five percent per month based on the unpaid balance, applies to returns filed after the deadline. Taxpayers should file, even if they can’t pay the full amount due.
Any payment made by April 17 will reduce or eliminate interest and late-payment penalties that apply to payments made after that date. The current interest rate is three percent per year, compounded daily, and the late-payment penalty is normally 0.5 percent per month.
Whether paying tax in full or in part, the fastest and easiest way to do so is by using one of the electronic payment options. E-pay options include:
- Electronic Federal Tax Payment System (EFTPS). This free service gives taxpayers a safe and convenient way to pay individual and business taxes by phone or online. To enroll or for more information, call 800-316-6541 or visit www.eftps.gov.
- Electronic funds withdrawal . E-file and e-pay in a single step.
- Credit or debit card . Both paper and electronic filers can pay their taxes by phone or online through any of several authorized credit and debit card processors. Though the IRS does not charge a fee for this service, the card processors do. For taxpayers who itemize their deductions, these convenience fees can be claimed on Schedule A Line 23.
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Taxpayers who choose to pay by check or money order should make the payment out to the “United States Treasury.” Write “2011 Form 1040,” name, address, daytime phone number and Social Security number on the front of the check or money order. To help insure that the payment is credited promptly, also enclose a Form 1040-V payment voucher.
In many cases, those struggling with unpaid taxes qualify for one of several relief programs, including those recently expanded under the IRS "Fresh Start" initiative. These include the following:
- Most people can set up a payment agreement with the IRS on line in a matter of minutes. Those who owe $50,000 or less in combined tax, penalties and interest can use the Online Payment Agreement to set up a monthly payment agreement for up to six years. Taxpayers can choose this option even if they have not yet received a bill or notice from the IRS. Alternatively, taxpayers can request a payment agreement by filing Form 9465-FS. This form can be downloaded from IRS.gov and mailed along with a tax return, bill or notice.
- Most unemployed filers and self-employed individuals whose business income dropped substantially can apply for a six-month extension of time to pay. Eligible taxpayers will not be charged a late-payment penalty if they pay any tax, penalty and interest due by Oct. 15, 2012. Taxpayers qualify if they were unemployed for any 30-day period between Jan. 1, 2011 and April 17, 2012. Self-employed people qualify if their business income declined 25 percent or more in 2011, due to the economy. Income limits and other special rules apply. Apply using Form 1127-A.
- Some struggling taxpayers may qualify for an offer-in-compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Generally, an offer will not be accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay.
Details on all filing and payment options are on IRS.gov.
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Need More Time to File Your Tax Return English | Spanish
WASHINGTON —The Internal Revenue Service today reminded anyone unable to meet next week’s tax deadline that they can easily get an automatic six-month tax-filing extension. And, the easiest and quickest way to get an extension is online through the Free File link on IRS.gov.
In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an automatic extension on Form 4868. Filing this form gives taxpayers until Oct. 15 to file a return. This is an extension of time to file; not an extension of time to pay.
To get the extra time, taxpayers must estimate their tax liability on this form and should also pay any amount due. Taxpayers can e-pay what they owe using the Electronic Federal Tax Payment System (EFTPS), by electronic funds withdrawal or with a credit or debit card. Those who choose to pay by check or money order should make the payment out to the “United States Treasury.”
By properly filing Form 4868, a taxpayer will avoid the late-filing penalty, normally five percent per month based on the unpaid balance, that applies to returns filed after the deadline. In addition, any payment made with an extension request will reduce or eliminate interest and late-payment penalties that apply to payments made after April 17. The current interest rate is three percent per year, compounded daily, and the late-payment penalty is normally 0.5 percent per month.
Besides Free File, taxpayers can choose to request an extension through a paid tax preparer, using tax-preparation software or by filing a paper Form 4868, available on IRS.gov. Of the 10.5 million extension forms received by the IRS last year, about 4 million were filed electronically.
Some taxpayers get more time to file without having to ask for it:
- Members of the military on duty outside the U.S., as well as U.S. citizens and resident aliens living and working abroad have until June 15 to file and pay, though interest still applies to payments made after April 17.
- Members of the military and others serving in Iraq, Afghanistan or other combat zone localities can typically wait until at least 180 days after they leave the combat zone to both file returns and pay any taxes due.
- People in parts of Indiana, Kentucky, Tennessee and West Virginia, affected by tornadoes, severe storms, floods and other recent natural disasters, have until May 31 to file and pay.
Details on all filing and payment options are on IRS.gov.
IRS Tax Tip for April 2, 2012: Free File Still Available for Last Minute Filers http://go.usa.gov/mc1
VIDEO: IRS Offers Tips for Last-Minute Filers http://www.multivu.com/mnr/55243-irs-free-file
WHAT YOU NEED TO KNOW IF YOU STILL HAVEN'T FILED:
Thanks to a holiday in the District of Columbia, all taxpayers have until April 17 to get Form 1040 into the IRS. Even with some extra time, the tax deadline is fast approaching.
For people who find taxes a little too taxing, the Internal Revenue Service (IRS) has a program that can help. It’s called Free File. You can use free software to do your taxes and e-file for free. Get started at IRS.gov/freefile.
There is a free option for everyone. People who make $57,000 or less, which includes most Americans, can use the Free File software. People who make more can use the Free File Fillable Form, an electronic version of the IRS paper form..
The IRS recognizes many people find this time of year stressful. Here are some tips that may help:
- Don’t wait until the last minute, you’re prone to make mistakes;
- Use IRS.gov for answers to your questions or to track your refund;
- Use Free File, there’s a free option for everyone;
- Don’t panic if you can’t pay; you can arrange for a payment agreement at IRS.gov;
- If you can’t make the April 17 deadline, use Free File to request an extension and make a payment if needed.
Nashville, TN - The Internal Revenue Service today reminded tax filers who owe taxes and are purposely waiting until the last-minute to file and pay that they can easily postpone paying but are less likely to make mistakes if they file now, before the April rush.
The IRS estimates that nearly 690,000 Tennesseans waited until April to file last year, many of them wanting to hold on to their money until the very last minute.
"Taxpayers can e-file right now and authorize a direct-debit payment for the April 17 deadline," said IRS spokesman Dan Boone. "That way they avoid the April rush, keep their money until the last minute, and get the benefits of e-filing."
E-filing benefits include a lower error rate and faster processing than with paper returns, along with confirmation of receipt by the IRS. Last-minute filers often make the most mistakes, Boone said, but e-filing helps eliminate common errors.
Boone also reminded filers that e-filing is secure and that anyone can e-file free at the IRS website, www.IRS.gov, using the Free File program. Filers with income of $57,000 or less can use brand-name tax software free, but all filers are eligible to use the Fillable Forms option.
Filers who need help with their taxes can visit one of about 170 free tax help sites in 53 Tennessee counties. The sites are staffed by trained volunteers who will prepare and e-file returns for filers whose household income was less than $50,000 or who are age 60 or older. Taxpayers can call the IRS at 1-800-906-9887 to find the closest help site.
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Senior Citizens, Working Families and Church Members Are Targets
WASHINGTON – The Internal Revenue Service warned senior citizens and other taxpayers to beware of an emerging scheme tempting them to file tax returns claiming fraudulent refunds.
The scheme carries a common theme of promising refunds to people who have little or no income and normally don’t have a tax filing requirement. Under the scheme, promoters claim they can obtain for their victims, often senior citizens, a tax refund or nonexistent stimulus payment based on the American Opportunity Tax Credit, even if the victim was not enrolled in or paying for college.
In recent weeks, the IRS has identified and stopped an upsurge of these bogus refund claims coming in from across the United States. The IRS is actively investigating the sources of the scheme, and its promoters may be subject to criminal prosecution.
“This is a disgraceful effort by scam artists to take advantage of people by giving them false hopes of a nonexistent refund,” said IRS Commissioner Doug Shulman. “We want to warn innocent taxpayers about this new scheme before more people get trapped.”
Typically, con artists falsely claim that refunds are available even if the victim went to school decades ago. In many cases, scammers are targeting seniors, people with very low incomes and members of church congregations with bogus promises of free money.
The IRS has also seen a variation of this scheme that incorrectly claims the college credit is available to compensate people for paying taxes on groceries.
The IRS has already detected and stopped thousands of these fraudulent claims. Nevertheless, the scheme can still be quite costly for victims. Promoters may charge exorbitant upfront fees to file these claims and are often long gone when victims discover they’ve been scammed.
The IRS is reminding people to be careful because all taxpayers, including those who use paid tax preparers, are legally responsible for the accuracy of their returns, and must repay any refunds received in error.
To get the facts on tax benefits related to education, go to the Tax Benefits for Education Information Center on IRS.gov.
To avoid becoming ensnared in this scheme, the IRS says taxpayers should beware of any of the following:
Fictitious claims for refunds or rebates based on false statements of entitlement to tax credits.
Unfamiliar for-profit tax services selling refund and credit schemes to the membership of local churches.
Internet solicitations that direct individuals to toll-free numbers and then solicit social security numbers.
Homemade flyers and brochures implying credits or refunds are available without proof of eligibility.
Offers of free money with no documentation required.
Promises of refunds for “Low Income – No Documents Tax Returns.”
Claims for the expired Economic Recovery Credit Program or for economic stimulus payments.
Unsolicited offers to prepare a return and split the refund.
Unfamiliar return preparation firms soliciting business from cities outside of the normal business or commuting area.
This refund scheme features many of the warning signs IRS cautions taxpayers to watch for when choosing a tax preparer. For advice on choosing a competent tax professional, see Tips for Choosing a Tax Return Preparer on IRS.gov.
For additional information on tax scams, see the 2012 Dirty Dozen list.
2. Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. It's important to keep in mind the IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS has information that can help you protect yourself from email scams.
3. Return Preparer Fraud involves tax preparers who prey on unsuspecting taxpayers. Questionable return preparers have been known to skim off their clients’ refunds, charge inflated fees for return preparation services and attract new clients by promising guaranteed or inflated refunds. Taxpayers should choose carefully when hiring a tax preparer. In 2012, every paid preparer needs to have a Preparer Tax Identification Number (PTIN) and enter it on the returns he or she prepares. For advice on how to find a competent tax professional, see Tips for Choosing a Tax Preparer.
Being informed could help you avoid being a tax scam victim. Read the entire list of IRS Dirty Dozen Tax Scams for 2012 at www.IRS.gov.
Podcast: Free Help Available Preparing Your Tax Return
