IRS Update

Here’s a quick update on recent IRS activities that might interest you.

* 2011 REFUNDS ARE DELAYED. Taxpayers are waiting longer for their tax refunds this year largely due to IRS efforts to catch fraudulent filings. According to a recent IRS report, the Service has identified more than 2.1 million fraudulent tax returns, many of which involve identity theft. IRS computers have had additional screening steps added which is the major factor in the refund delays.

* PENALTY RELIEF OFFERED. Aware of the difficult financial situation many taxpayers find themselves in m today, the IRS has expanded its “Fresh Start” initiative offering penalty relief to certain unemployed taxpayers.

Normally, a failure-to-pay penalty of one-half of one percent per month, up to a maximum of 25%, is charged on overdue taxes. Under the relief program, eligible taxpayers can get a six-month extension to pay their 2011 taxes before this penalty kicks in.

The relief is available to workers who have been unemployed at least 30 consecutive days during 2011 or 2012 and to self-employed individuals who experienced a 25% or larger drop in business income in 2011 due to the economy. Income limits apply, and taxes due cannot exceed $50,000.

The Fresh Start program also changes the upper limit of taxes owed for requesting a streamlined installment agreement from $25,000 to $50,000 and increases the maximum term from five to six years.

For details on the relief program, contact our office.

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