For many taxpayers, it is time to wrap up the chore of filling out federal income tax returns and paying whatever is owed towards the U.S. Treasury. But this year, lots of people are eligible for additional time to pay without getting hit by a stiff penalty.

First, some background: usually, the official deadline to file and pay is Tuesday, April 17. (It’s generally April 15, but that falls on a Sunday this year, and April 16 can at times be a vacation in Washington, D.C.) People who can’t meet the April 17 deadline can ask the Internal Revenue Service to get a six-month filing extension. That will let them have until Oct. 15 to file.

The IRS is granting a new six-month grace period on failure-to-pay penalties for several wage earners and self-employed individuals. The request for an extension to pay any taxes owed will bring relief from your failure-to-pay penalty for tax year 2011 so long as the tax and interest are fully paid by Oct. 15, 2012.

Recently, though, the IRS announced plans for “new penalty relief” for some taxpayers who still owe after April 17.

This special relief may be obtained to two types of taxpayers: wage earners who had been unemployed no less than 30 consecutive days during 2011 or 2012 and those self-employed individuals who experienced “a 25% or greater reduction in business income in 2011 because of the economy.”

A taxpayer’s income should in no way exceed $200,000 if he or she files as married filing jointly or not exceed $100,000 if he or she files as single or head of household, based on the IRS. This penalty relief can also be restricted to taxpayers whose 2011 balance due won’t exceed $50,000.

To obtain the 2011 penalty relief, you’ll need to fill out a Form 1127A, which is available on the IRS website. Do not expect any relief from interest regarding the balance due, though. The IRS says it is legally necessary to charge interest on unpaid back taxes and they have the authority to waive this charge. The rate is now 3% by utilizing an annual basis.

If you have questions or concerns regarding tax extensions please visit our website at Karla Dennis And Associates, Inc.™. We can discuss numerous tax organizing and business methods for you, so get in contact with us now and let us prepare you for the future. Also on our web site you can make use of the information and tools available to you as well as get in touch with our expert tax extension enterprise advisors and/or Enrolled Agents; they can help you with all of the tools you will want or need for filing a tax extension.