If you can’t pay your tax liabilities, file your tax returns!

With the April 17th tax filing deadline rapidly approaching, IRS Attorneys recommend to taxpayers that even if they can’t pay what taxes they owe all at once, they should still file their unfiled tax returns and make whatever payment arrangements may be possible. These same IRS tax lawyers warn that if taxpayers don’t file their unfiled returns they’re immediately facing a failure-to-file penalty as well as interest, additional costs and potential IRS lien and/or wage levy.

Last year, the IRS issued new rules intended to help soften the blow for taxpayers who can’t afford to pay their back taxes when owed. Amongst these new rules was a measure to increase the threshold when the government files an IRS lien, as well as a provision to expand the installment and offer of compromise programs to allow more taxpayers to qualify. Despite the changes, however, IRS attorneys caution taxpayers they may still face a host of problems for not paying back taxes they owe, when they owed it, and need to understand the options available to deal with their back taxes. The IRS also followed-up this year with some expanded penalty relief.

To help those who may be struggling to pay their back taxes, the IRS has reportedly expanded its “Fresh Start” initiative. According to IRS tax lawyers, in order to take advantage of this initiative, taxpayers may fill out a new Form 1127A to request the 2011 penalty relief if they fall within one of these two categories:

Wage earners who have been unemployed at least 30 consecutive days during 2011 or in 2012 up to this year’s April 17 tax deadline; or
Self-employed individuals who experienced a 25-percent or greater reduction in business income in 2011 due to the economy.

IRS attorneys report that to qualify for this penalty relief, the taxpayer’s adjusted gross income must not exceed $200,000 (if married, filing jointly) or $100,000 if filing status is single, married filing separately, head of household or qualifying widower. However, IRS tax lawyers are quick to point out that a taxpayer’s 2011 balance due may not exceed $50,000. IRS tax attorneys warn that the penalty relief period only extends to October 15, 2012, and interest continues to accrue during that period.


Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

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