Get breaking news alerts via email

Click here to manage your alerts
Daniel Acker | Bloomberg News Service Financial advisers often say that taxpayers are better off adjusting their withholding so that they have only what’s necessary deducted from their paychecks.
IRS plan eases penalty payments for Utah taxpayers
Initiative » Agency aims to help jobless and the self-employed.
First Published Mar 12 2012 08:33 am • Last Updated Jun 25 2012 11:35 pm

The Internal Revenue Service is launching a major expansion of its Fresh Start initiative to help make it easier for struggling taxpayers to meet their tax obligations.

Under new program provisions, some taxpayers who have been unemployed for 30 days or longer will be able to avoid failure-to-pay tax penalties.

Join the Discussion
Post a Comment

In addition, the IRS is doubling the dollar threshold for taxpayers eligible for installment agreements to help more people qualify for that program.

"We have an obligation to work with taxpayers who are struggling to make ends meet," IRS Commissioner Doug Shulman said.

"This new approach makes sense for taxpayers and for the nation’s tax system, and it’s part of a wider effort we have under way to help struggling taxpayers."

The IRS said to help those in need, a six-month grace period on failure-to-pay penalties will be made available to certain wage earners and those who are self-employed.

The penalty relief will be available to two categories of taxpayers:

• Wage earners who have been unemployed at least 30 consecutive days during 2011 or 2012 up to the April 17 deadline for filing a federal tax return this year.

• Self-employed individuals who experience a 25 percent or greater reduction in business income in 2011 due to the economy.

Under those new provisions, when a taxpayer files for an extension of time to pay, they will be relieved of the failure-to-pay penalty for tax year 2011 if the tax, interest and any other penalties are fully paid by Oct. 15, 2012.

story continues below
story continues below

The failure-to-pay penalty is generally one-half of 1 percent per month with an upper limit of 25 percent.

Taxpayers meeting the eligibility criteria will need to complete a new Form 1127A to seek the 2011 penalty relief. The new form is available at IRS.gov/form1127.

The new Fresh Start provisions also will give more taxpayers the opportunity to use streamlined installment agreements to catch up on back taxes.

The IRS said effective immediately, the threshold for using an installment agreement without having to supply the IRS with a financial statement has been raised from $25,000 to $50,000.

"Taxpayers who owe up to $50,000 in back taxes will now be able to enter into a streamlined agreement with the IRS that stretches the payment out over a series of months, or years," the IRS said, noting the maximum term for streamlined installment agreements also has been raised to 72 months from the current 60-month maximum.

Taxpayers can set up an installment agreement with the IRS by going to the "On-line Payment Agreement" page at IRS.gov and following the instructions.

Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment

About Reader Comments

Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Access your e-Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.