Taxpayers May Be Eligible for Late Payment Penalty Relief

gBecause Congress took forever to pass the American Taxpayer Relief Act (“ATRA”), the IRS was not equipped to process forms affected by ATRA.  On March 20, 2013, the IRS announced that it would provide relief from late payment penalties for taxpayers filing 2012 returns with forms delayed by passage of ATRA. 

Tax filing deadlines (April 15, 2013 for individuals, estates and trusts and March 15, 2013 for corporations) can be extended for a period of six months.  An extension of time to file, however, is not an extension to pay.  Generally speaking, if you do not pay by the prescribed date for payment, the IRS will assess the failure to pay penalty.  Congress gave the IRS the power to penalize the taxpayer in an amount equal to 0.5% of the net tax shown on the return up to a maximum of 25% for each month, or part of a month, beyond the prescribed date for payment that the tax remains unpaid.

In IR-2013-31, the IRS stated that it will abate the failure to pay penalty if the: 1) taxpayer requests a filing extension; 2) pays the estimated tax liability by the original return’s due date; and 3) pays any remaining tax by the extended due date of the return.  Therefore, the IRS is allowing payment by the extended due date if the taxpayer makes a good faith estimate of tax and pays the entire liability by the extended due date of the return.  Interest, however, will continue to run on any unpaid tax liability.

IRS tax penalties can be financially devastating.  At the Law Offices of Todd S. Unger, Esq., LLC, we may be able to help you abate tax penalties. Call us today at (877) 544-4743, or fill out a contact form and request a confidential consultation.

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