March 8, 2012 at 1:03 PM ET
The Internal Revenue Service has announced plans to help people who are struggling to pay their taxes because of a job loss or big drop in income.
The new offerings are an expansion of an initiative, called “Fresh Start,” that dates to 2008. This week the IRS said it is expanding the program so it can help more people get back on their feet financially.
“We have an obligation to work with taxpayers who are struggling to make ends meet," IRS Commissioner Doug Shulman said in a statement.
Under the expanded program, the IRS will grant a six-month grace period on failure-to-pay penalties for people who were unemployed for at least 30 days in 2011 or early 2012.
They also will grant the grace period to self-employed people who saw their income fall by 25 percent or more in 2011 because of the weak economy.
There are some restrictions. To quality, the taxpayer’s income must not exceed $100,000 for individual filers or $200,000 for those filing jointly. In addition, they must not owe more than $50,000 in taxes 2011.
There’s also one caveat: The IRS will continue to charge interest on unpaid back taxes, since it said it does not have the authority to waive that charge.
The IRS also said it is expanding a program that lets people pay back taxes in installments rather than a lump sum. The program will now be more readily available to people who owe up to $50,000 in back taxes, and the term of repayment has been extended to 72 months from 60 months.
If you owe more than $50,000, you’ll still have to supply the IRS with some paperwork, and you may also have to pay down your balance somewhat to qualify for the program.
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