Guest Author: Patrick Moro, Columbus, Ohio
With the unemployment rate lingering around 8.3%, it is not uncommon for taxpayers in Ohio to find themselves in a position of being unable to pay their tax liabilities because they are unemployed. To remedy this problem, the Internal Revenue Service(“ IRS ”) has just announced an extension of the 2008 “Fresh Start” initiative, a program geared towards helping taxpayers that have either: (i) been unemployed for at least 30 days, or (ii) if self-employed, experienced at least a 25% decrease in business income for 2011.
Under the Fresh Start program, taxpayers can request a 6-month grace period on failure to pay penalties—ranging from .5% to 25% of the amount due—on the condition that the tax, interest, and other penalties are paid in full by October 15, 2012. This option can potentially save struggling taxpayers thousands of dollars, but it should be noted that while the failure to pay penalty is suspended, taxpayers must still pay the statutory interest of 3% on back taxes.
In addition to the statutory interest rate, participation in this program is subject to the following conditions:
- Income must not exceed $200,000 when married, filing jointly; or
- Income must not exceed $100,000 when filing single, or as head of household; and
- The taxpayer’s calendar year balance of tax liabilities must not exceed $50,000.
The program also encompasses a streamlined procedure for entering into installment agreements with the IRS. This is great news for taxpayers with back taxes because taxpayers can now enter into in an installment agreement with much less hassle. Typically, taxpayers with $25,000 or more in back taxes are required to provide financial statements to the IRS when entering into installment agreement negotiations. This amount has been increased to $50,000 and agreements can now last for a term of 72 months, rather than the current 60 month maximum.
If you are having difficulty paying your tax liabilities and have been unemployed for 30 or more days in 2011 or 2012, or experienced at least a 25% drop in business income related to your business, contact the experienced tax lawyers at Nardone Law Group, LLC for assistance. Nardone Law Group, LLC represents individuals and business taxpayers in Akron, Canton, Cincinnati, Columbus, Cleveland, Dayton, and all surrounding areas.