Tax Filing Deadlines - Reprieve Deadline October 15th - Avoid Paying Interest and Penalties

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For those of you who are tax filing procrastinators, the IRS has some good news and some bad news for you.

The bad news is that, for most taxpayers, you missed the Oct. 15^th absolutely, positively drop-dead filing date.

The good news is that some of you received a reprieve, so the bite won't hurt as much when the IRS takes a chunk out of you. Some who received a reprieve are people who were affected by the April 16 shooting at the Virginia Tech University campus. Victims, their families, emergency responders and university students and employees were included in this reprieve.

That reprieve deadline was Oct. 15. To receive the reprieve, filers needed to notify the IRS before filing or making a payment.

Some Louisiana taxpayers also got a break.

Residents of Jefferson, Orleans and St. Martin parishes had until Oct. 24 to file their 2006 tax returns.

Those areas, hit by severe storms and tornadoes last February, were designated as presidential disaster areas. Louisiana taxpayers in those areas were required to file an extension request and pay any taxes they estimated they would owe by April 24.

The IRS also gave help to Louisiana taxpayers not in the covered disaster areas, but whose books, records or tax professionals’ offices are in the covered areas.

But the rest of those taxpayers who asked for more time, and paid an estimation of their 2006 tax bill, had to have finished the filing process by the Oct. 15 deadline.

Around 9 million taxpayers filed Form 4868, seeking an extension to file, back in April. The extension gave them six months to file a 1040.

That extension, however, was for paperwork only. The IRS expected a check covering an estimate of your final tax bill with that form.

If you didn’t send a check, or if your estimation was way off, waiting longer to file could cost you even more, because of penalties for late-filing and late-payment.

Taxpayers who don't file on time and who owe money can be charged a failure-to-file fee of 5 percent of their total tax bill. This fee is a 4.5 percent late-filing fee and a 0.5 percent late-payment penalty. It's assessed for each month, or part of a month, that tax is due. It can accumulate until it hits 25 percent of the tax bill.

The IRS is prohibited from simultaneously imposing both late-filing and late-payment penalties, so the nonpayment fee is waived for the months that a filer procrastinates.

If you continue to duck your tax requirements past the October deadline you could ultimately get slapped with a total penalty charge of up to 47.5 percent, a 22.5 percent late-filing fee plus a 25 percent late-payment charge, of the tax owed. For returns that are more than 60 days late, the minimum failure-to-file penalty is the smaller of $100 or 100 percent of the tax due.

The late-payment penalty is automatic when a return showing tax due is sent without payment. The IRS can waive the late-filing penalty if you show reasonable cause for missing the deadline. The IRS determines reasonable cause, by the way.

And don't forget that the U.S. government, like any other creditor, tacks on interest charges, compounded daily, to any unpaid tax bill. For the last few years when interest rates were at historic lows, the charge was more tolerable. But now that rates have started to rise, so will the extra amount you'll owe.

The tax agency's interest rate is the federal short-term rate plus 3 percentage points. It is reset every three months. Between Oct. 1 and Dec. 31, 2007, the agency will charge 8 percent interest.