This October 15th may feel more like April 15th to many as the 6-month extension to file 2011 tax returns ends on Monday. Procrastinators are scrambling to Liberty Tax Service (NASDAQ:TAX) offices to beat the deadline. In September, the Internal Revenue Service said that many of the 11+ million taxpayers who requested an automatic six-month extension this year still have yet to file.
A common misconception for filing the extension is to delay payment. But this is not the case – if you owe taxes your payment deadline was April 15. Late payment penalties and interest are assessed when you do not send the IRS your tax obligation by the tax deadline. The late payment penalty is usually 0.5% of your unpaid taxes, with the maximum at 25%.
The IRS will also assess a late filing penalty of 5% of the unpaid taxes not paid by the due date for each month your taxes are late, with a maximum also at 25%. If your payment is more than 60 days past due, the minimum late filing penalty is $135 or the balance of the taxes you owe, whichever is less.
Taxpayers have a number of options available to pay their tax liability. Those that can pay their tax liability in full can do so by debit or credit card, electronic funds transfer or check or money order. Or taxpayers can ask the IRS for permission to make monthly installment payments by attaching Form 9465, Installment Agreement Request to their tax return. Another option for payments is to have the funds directly debited from a bank account. A Liberty Tax office can assist you with these options.Liberty Tax Service reiterates the importance of double checking your tax return and not rushing through it, possibly missing credits and deductions. There is a little good news for late filers out there: if you get money back, you won’t be charged any penalties or fees at all.