IRS offers tips for late filers, taxpayers with payment issues
ST. PAUL -- April 15, or "tax day," has come and gone, but some taxpayers may have questions about the return they’ve not yet filed or a tax debt they couldn’t pay. The Internal Revenue Service offers post-tax day tips for people with outstanding tax issues.
Penalties on late returns
Taxpayers who missed the April 15 should file their tax return as soon as possible.
Generally, there is no penalty on late-filed returns qualifying for a refund, but don’t delay too long. In order to receive a refund, a taxpayer must file within three years of the due date.
Taxpayers who owe tax should file as soon as possible and pay as much as they can to minimize penalties and interest. The late-filing penalty is five percent per month (or part of a month) of the tax due (up to 25 percent). Taxpayers who file more than 60 days late have a minimum penalty of $135 or an amount equal to the tax due, whichever is less. The late-payment penalty is one-half of one percent. Interest, currently at a rate of 4 percent, compounds daily.
Taxpayers can mail their payment with their return, pay the tax by credit or debit card, or request to pay through an installment agreement. Taxpayers can request an agreement through the Online Payment Agreement Application at IRS.gov or by submitting Form 9465, Installment Agreement Request with the tax return or after receiving a notice from the IRS. Taxpayers choose the monthly due date, propose a payment amount and may arrange an electronic funds transfer to avoid missed payments. The installment agreement fee is $105 ($52 when payments are directly debited from a bank account or $43 for some low-income taxpayers).
After entering into an installment agreement, interest and a reduced late-payment penalty of one-fourth of one percent continue to accrue until the balance is paid. Taxpayers with an installment agreement must file and pay subsequent taxes on time.
Financial issues and taxes
IRS.gov has a list of What If? scenarios that deal with tax-related financial situations like home foreclosure, job loss, tapping retirement accounts early and inability to pay taxes. These scenarios provide information on specific actions taxpayers can take and link to relevant IRS publications.
The IRS encourages financially distressed taxpayers to proactively seek help from the agency. With many people facing financial difficulties, the IRS is taking several additional steps to help people who owe back taxes. People in a hardship situation, especially those who’ve been compliant in the past and are facing unusual hardships now, will generally find more flexibility from the agency in relation to payment agreements and collection actions.
E-filing still available
Late filers can still file electronically through Oct. 15. Visit IRS.gov for links to e-file software products, including the IRS Free File program. Free File is for taxpayers with income below $56,000 and offers free tax software from 20 different software companies. Most e-filing products use an interview-based format to guide taxpayers step-by-step through the preparation process. The program uses a taxpayer’s answers to simple questions to determine eligibility for a variety of tax breaks a person may have overlooked on their own. It also makes math calculations and fills in tax table figures itself, dramatically reducing the risk of human errors that can delay processing and refunds.
The new Free File Fillable Forms are available to anyone, regardless of income. They provide a method for people who prepare on paper to electronically transmit their information, avoiding a trip to the post office and getting a faster refund. Choosing direct deposit with e-file generally speeds refunds within 10 days.
Beware of scams
The IRS typically sees a spike in tax-related email scams after tax time. Beware of these phishing scams, which lure personal or financial information from victims by posing as a real entity, like the IRS. Crooks use the information a “hooked” victim provides to steal the victim’s identity, access bank accounts, run up credit card charges or apply for loans in the victim’s name.
The most common IRS-related scams claim to notify taxpayers of an outstanding refund, an upcoming audit or another tax issue. The messages can sound and look very official, lifting graphics and text from the real IRS Web site for authenticity. They solicit information such as Social Security and credit card numbers and even PINs and passwords.
The IRS does not use e-mail to initiate contact with taxpayers about their tax account and will not ask for personal identifying or financial information via unsolicited e-mails. Taxpayers can forward bogus e-mails to firstname.lastname@example.org. IRS.gov has more information on phishing and tax-related identity theft. Remember, the only official IRS Web site is IRS.gov.
Tax help beyond tax season
The IRS Web site at IRS.gov has a wealth of information and is available 24 hours a day. Taxpayers also can call the IRS at 1-800-829-1040 Monday through Friday from 7 a.m. to 10 p.m. for help with tax questions or for the address and hours of a local IRS Taxpayer Assistance Center if they prefer face-to-face assistance.