CCH Offers Five Reasons to Figure and Pay Your Tax on Time

RIVERWOODS, Ill., March 25 /PRNewswire/ -- If civic duty and a desire to sleep better aren't sufficient reasons for tackling your taxes, here are five practical considerations for filing and paying to the best of your ability from CCH, a Wolters Kluwer business and a leading provider of tax, accounting and audit information, software and services (CCHGroup.com).

1. You'll avoid the failure-to-file penalty. The penalty is 5 percent per month – or part of a month – of the tax due, capped at 25 percent. But if the return is not filed within 60 days of the due date plus extensions, the penalty will be at least $135 or 100 percent of the tax due, whichever is less.  
2. It's likely this year that you'll get a larger refund, due to tax breaks that were part of last year's stimulus legislation. The sooner you file, the sooner you'll get it.
3. If you do owe, you'll avoid a late payment penalty if you pay on time. The penalty is one-half of 1 percent for each month – or part of a month – the tax remains unpaid, up to a maximum of 25 percent. The penalty can increase if the IRS levies against you.  If you file late and owe both failure-to-file and failure-to-pay penalties, the failure-to-file penalty may be reduced by the failure-to-pay penalty.
4. If you owe and money is tight, you have options. If you can pay the full amount within 120 days, you can ask the IRS for a short-term administrative extension by calling 1-800-829-1040.  For a 2 to 5 percent "convenience" fee you can charge your taxes through a third party and you may earn frequent flyer miles or other perks. You can also set up an installment agreement with the IRS, which is required to accept installment payments if you have a good filing and payment record, the amount owed is not more than $10,000 and it can be paid off within three years.
5. The IRS has said it will be extra-understanding this year about people in financial difficulties who simply cannot pay their full amount due. The offer in compromise program, in which the IRS agrees to accept less than full payment of a tax debt, normally calculates the amount that a taxpayer has to pay based on their prior years' earnings, but for people who've experienced unemployment, the IRS can now base the amount on the taxpayer's present income and prospects for future earning.

About CCH, a Wolters Kluwer business

CCH, a Wolters Kluwer business (CCHGroup.com) is a leading provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913. CCH is based in Riverwoods, Ill. Wolters Kluwer is a leading global information services and publishing company. Wolters Kluwer is headquartered in Alphen aan den Rijn, the Netherlands (www.wolterskluwer.com).

SOURCE CCH, a Wolters Kluwer business