Tim’s Tax News on the Tenth – April 2025

A recent press release by the IRS addressed the options that are available to taxpayers who may owe more on April 15^th than they can pay. The IRS advised taxpayers that they do not need to wait until April 15 to file their 2024 federal return, and if they owe and are unable to pay the balance in full, there are payment plans available to help them pay their tax obligation.

Tax returns for 2024 are due on April 15, 2025, with exceptions for taxpayers in a disaster area, combat zone, or living and working abroad. April 15 is also the deadline for making tax payments to avoid late charges, such as interest and the late payment penalty for 2024’s taxes. It is also the date for the first estimated tax payment for tax year 2025.

The IRS urged those who cannot pay their full balance to file and pay as much as they can on or before April 15. Filing on time avoids the late filing penalty, which is usually 5% per month on the unpaid balance.

In addition, by paying at least part of what they owe on time, taxpayers can reduce the amount of interest and late payment penalty that will be added to any payments made after April 15. Currently, the interest rate is 7% per year, compounded daily, and the penalty rate is usually 0.5% (one-half of one percent) per month.

For anyone with unpaid tax, the IRS cautions that requesting an extension is not a solution because it only gives a taxpayer more time to file, not more time to pay.

Most individual taxpayers that have a balance due should qualify for a payment plan. The payment plan must meet certain criteria to be accepted. It should be noted that a payment plan agreement does not stop the accrual of penalties and interest. Anyone who cannot qualify for a payment plan can explore other options, such as: an Offer in Compromise -- taxpayers qualify to settle their tax liabilities for less than the total amount owed by submitting an Offer in Compromise. If a taxpayer cannot qualify for an Offer in Compromise, they may qualify for a temporary delay of collection -- taxpayers can contact the IRS to request a temporary delay of the collection process. If the IRS determines that the taxpayer is unable to pay, it may delay collection until the taxpayer’s financial condition improves. Penalties and interest continue to accrue until the full amount is paid.

If you would like more details, please do not hesitate to call our office. Our office has been successful in helping taxpayers with IRS and IDOR collection problems for over 31 years. If you have a tax or debt problem, please contact me at 847-705-9698 or thughes@lavellelaw.com and find out how we can help you.

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