Filing After April 15th

*In 2006, April 15 falls on a Saturday; therefore, the Federal tax return filing deadline for Tax Year 2005 is Monday, April 17, 2006. (Residents of the District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New York and Vermont may be able to file Federal tax returns as late as Tuesday, April 18, 2006, due to Patriot's Day. The IRS will announce final confirmation regarding Patriot's Day in January 2006.)

If you didn't file by April 17, you are not alone. In 2003, according to the IRS, 8.2M taxpayers needed to file for an extension.

Similarly, if you need to modify your return, we tell you how to go about that. And, if you haven't received your refund check yet or if you've lost your refund check, scan to the bottom of this article for links to more information about finding your money.

Didn't Get Your Taxes Done by April 17?

Here's some help...answers to the most common questions related to filing your tax return after the April 17 deadline:

• What are the benefits of filing for an extension?
• How long is my extension good for?
• What if I didn't ask for an extension?
• What if I owe the IRS but can't pay?
• Can I pay my tax by credit card?
• Can I pay my tax in installments over time?
• Does the IRS ever negotiate the amount owed?
• Can I get an extension of time to pay my tax?

What Are the Benefits of Filing for an Extension?

If you filed for an extension with the IRS before the clock struck midnight on April 15 you have protected yourself from some potential penalties. Regardless of whether you have filed for an extension or not, there is no time like the present to prepare and file your return.

How Long Is My Extension Good For?

If you filed for an extension (typically using IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return) before April 18, you have until October 16 to file your 2005 federal income tax return.

October 16 is the final due date for individuals to file an extended personal tax return.

What If I Didn't Ask for an Extension?

The consequences differ depending on whether you owe the IRS money or the IRS owes you a refund.

If You Are Getting a Refund

If you are due a refund (meaning you have overpaid your tax), you can wait up to three years from the original April 15 deadline to file your return and claim your refund. There are two primary drawbacks to waiting this long:

1. Who wants to wait that long for their money?
2. The statute of limitations for the IRS to audit your return starts at the later of the original due date or when you actually file your return.

If You Have a Balance Due

In the circumstance where you have a balance due to the IRS (meaning you still owe some tax), the sooner you pay the tax and file your return, the more you can save yourself in penalties and interest.

If you have extended your return and didn't pay at least 100 percent of the tax you owe by April 17, you'll end up owing a late payment penalty of 0.5 percent per month until the tax is paid. The maximum late payment penalty is 25 percent of the amount due. You'll also owe interest on whatever amount you didn't pay by April 17. The current rate of interest charge is 5 percent per month compounded daily.

If you didn't get an extension and still owe a balance due you are looking at a late filing penalty of 5 percent of the unpaid tax per month plus interest. The maximum late filing penalty is 25 percent of amount due.

Beware: No Statute of Limitations

Regardless of whether you are due a refund or owe, there is another point to keep in mind. If you never file your return there is no limit on how many years the IRS can go back to assess and collect tax.

So, one way or the other, there are compelling reasons to get on with it and file your return.

What If I Owe the IRS But Can’t Pay?

If you find yourself in this situation, you have a few options available, ranging from credit card payments to installment agreements to "offers in compromise".

You can also simply file your return and wait for the IRS to bill you. Don't be surprised if the bill includes interest and penalties. There is also a form that can be filed to request an extension of time to pay your tax, but the legal requirements are strict. More on these options follows.

Can I Pay My Tax by Credit Card?

Yes, you can pay your tax bill with credit in a variety of ways.

Credit card and bank loans are both payment options. You can apply for a bank loan, home equity loan, or take a cash advance on a credit card to pay your tax bill.

Third party providers like Official Payments Corporation are also available to facilitate using a credit card to pay your tax bill. These companies charge a convenience fee for their service; that fee is in addition to any interest and finance charges your credit card company may charge you.

TurboTax walks you through how to pay your tax due step-by-step.

Can I Pay My Tax in Installments Over Time?

If you'd like to establish an installment plan for paying your tax bill, prepare and attach IRS Form 9465, Installment Agreement Request to the front of your return. Note that the IRS charges a $43 set-up fee, a 0.5 percent per month late payment penalty on the balance due each month, plus interest. The IRS will bill you the $43 fee separately, so don't send it with your return.

You have the flexibility to choose your monthly due date and can choose to have the agreed to amount debited from your bank account each month. If you owe $25,000 or less, and agree to pay the balance off within five years, the IRS has a streamlined approval process. Be aware, however, that a notice of federal tax lien may be filed to protect the government's interest until your debt is paid in full.

The TurboTax products walk you through an installment request step-by-step.

Does the IRS Ever Negotiate the Amount Owed?

An "offer in compromise" is an agreement between a taxpayer and the IRS that settles the taxpayer's tax debt. Under certain circumstances the IRS is authorized to resolve a tax liability by accepting less than full payment. There are three circumstances under which the IRS is authorized to compromise:

1. When there is doubt that the tax is correct.
2. When there is doubt that you could ever pay the tax in full.
3. When the tax is correct and you could pay it but payment would result in an exceptional circumstance economic hardship or be unfair and inequitable.

Form 656, Offer in Compromise Package should be completed to file an Offer in Compromise with the IRS. Included with the Form 656 package are Form 433-A, Collection Information Statement for Wage Earners & Self-Employed Individuals and Form 433-B, Collection Information Statement for Businesses; you may need to complete the appropriate Form 433 and should be prepared to provide other documentation and explanations as they are requested.

Various options are available for accepted Offers in Compromise requests, such as a reduced total payment and scheduled monthly payments. Defaulting on an accepted offer in compromise can result in the IRS filing suit against you and reinstatement of the original tax debt, plus interest and penalties.

Can I Get an Extension of Time to Pay My Tax?

An extension of time for payment of tax can be filed with the IRS on Form 1127, Application for Extension of Time for Payment of Tax, but the legal requirements are strict:

• Form 1127 must be received by the IRS on or before the date that the tax is due.
• You must provide a complete statement of all your assets and liabilities at the end of the last month and an itemized list of money you received and spent for the three months immediately prior to sending in the extension to pay request.
• You must demonstrate that paying the tax when due would result in undue hardship; simple inconvenience is not enough of a hardship to qualify.
• You need to show that paying the tax when due would result in a substantial financial loss and that you don't have the cash, or can't raise the money by selling property or through borrowing.

When approved, extensions to pay are generally limited to six months. Plus, the IRS requires some acceptable form of security before granting an extension of time to pay. The security may be in the form of a bond, notice of lien, mortgage, or other means, depending upon individual circumstances.