As IRS Tax Deadline Looms, Filers Have Options

DATE_PUBLISHED

The extended tax filing deadline of July 15th proposed by the People First Initiative tax relief is quickly approaching, while many Americans continue to face significant financial hardships as a result of COVID19. Taxpayers that had not yet filed by March 15th must do so now, and those who had set up a payment agreement must resume payment to avoid penalties and potentially an agreement default. While the thought of filing your taxes can be overwhelming during these times, it is highly encouraged that you file something by July 15th as failure-to-pay penalties can be severe.

What you should know regarding the July 15th tax filing deadline:

  • If you are unable to file your tax return under your current circumstances, you may file Form 4868 by July 15th for a three-month extension, thus allowing you to prepare the form until October 15th.
  • While you may request an extension for filing your form, there is no extension on your payment. Therefore interest begins accruing on July 15th.
  • The IRS may abate penalties for “reasonable causes,” however, these are limited. Claiming a prior year illness, for example, may not be applicable, but proof that you have been severely affected by the current pandemic might have a better chance of being taken into consideration.
  • If you have a clean IRS record, you may be eligible for a "first-time” abatement.

Implications of the July 15th deadline on payment agreements:

If you initiated a payment agreement earlier this year and did not make any payments between March 25th and July 15th, given the People First Initiative tax relief, it is now time to resume payments. Applicable IRS agreements include: Installment Agreements, Offers in Compromise, and Private Debt Collection Payments.

Some steps you should take to resume your IRS agreement:

  • If the agreement was suspended between April 1st and July 15th, you must pay by the first monthly payment deadline after July 15th. While the IRS did not default the agreement for this time period, interest did accrue on the balance owed.
  • If you opted for direct deposit payments and canceled them during this time period, you should contact your bank as soon as possible to ensure the first monthly payment will be issued on July 15th or as applicable, per your agreement.
  • If you are unable to meet the extended deadline given to COVID19 related hardships, you are encouraged to contact the IRS to possibly revise your agreement. You can reach out to them by visiting IRS.gov/paymentplan or calling the customer service number on their IRS notice if you have a Direct Debit Installment Agreement (DDIA).

All in all, always keep in mind that the failure-to-pay is immediate and large. If you cannot afford to pay your taxes, you should, at the very least, file your return. If you have not yet done so, contact the IRS to explore your options.

Need help figuring out what's your best option fast? Worry not, Taxfyle can help you on the fly! Even with an imminent deadline, you can connect with a licensed tax professional that'll help you decide the best solution for you, whether you're an individual filer or filing for your business. Best of all, there's no additional charge for filing an extension when you place your order with Taxfyle. Don't miss this deadline and get started today.

Subscribe to Taxfyle Resources & Tax Tips

Get the latest posts delivered right to your inbox

Thank you for subscribing!
Oops! Something went wrong while submitting the form.
How Will the New 2021 Tax Deadline and COVID Relief Bill Affect Your IRA Contributions?
COVID-19 IRS Updates
You not only have until May 17 the file your taxes — you also have until that date to make contributions to your IRA.
3 Min Read
If you filed your taxes early, when will you get refunded for the $10,200 unemployment tax waiver?
COVID-19 IRS Updates
The American Rescue Plan includes a tax break on unemployment benefits.
3 Min Read
Move Around in 2020? You Might Owe More Taxes Than You Think
COVID-19 IRS Updates
2020 was a disruptive year in so many ways, and for some of us, that meant moving between states.
3 Min Read

File simpler.

File smarter.

File with Taxfyle.