What IRS Form 1127 (2018) Is For
IRS Form 1127 (2018) allows taxpayers facing financial hardships to request an extension of time to pay certain federal taxes without immediate payment penalties. It is designed for situations where paying taxes by the original due date would cause undue hardship, such as significant financial difficulties or being forced to sell property at a loss. The form applies to multiple tax obligations, including income tax, self-employment tax, estate tax, and other taxes owed under the Internal Revenue Code.
For more information on IRS forms and payment relief strategies, visit our IRS Form Help Center.
When You’d Use IRS Form 1127 (2018)
You should request an extension when paying your tax liability on time would result in undue hardship or substantial financial loss:
- For taxes shown on your return: File IRS Form 1127 before the original due date if paying the correct amount of taxes would cause financial hardship or loss of essential assets.
- For deficiency amounts after IRS review: If the IRS issues an IRS Notice or tax bill for additional tax owed, you may submit Form 1127 before the due date listed on that notice to request an extension of time for payment.
- For individual taxpayers facing sudden financial difficulties: File when an unexpected financial situation prevents you from gathering funds or making full tax payments by the due date stated on your tax return.
- For estate tax obligations: Use Form 1127 to postpone payment when immediate payment would require selling estate property below fair market value, resulting in unnecessary financial loss.
If your extension is denied, consider setting up an IRS payment plan to pay your taxes in installments.
Key Rules or Details for Tax Year 2018
These IRS requirements explain the eligibility and conditions for receiving an extension under IRS Form 1127 (2018):
- Definition of undue hardship: The IRS defines undue hardship as more than inconvenience, requiring proof that paying taxes immediately would result in a substantial financial loss.
- Eligibility criteria: Applicants must submit detailed financial information, including all assets, liabilities, and income records for the previous three months.
- Exclusions: Extensions are not available if the unpaid tax resulted from negligence, fraud, or intentional disregard of federal tax laws.
- Filing form location: Most taxpayers must file Form 1127 with their local IRS Advisory Group Manager, while estate and gift tax applications may require mailing to a separate address.
- Joint returns: When submitting a joint tax return, both spouses must sign and date the form to ensure proper authorization. If you receive penalties for late payment, you might be eligible for IRS penalty abatement.
- Interest and penalty rules: Interest charges continue to accumulate on any unpaid tax balance even when the IRS grants an extension.
Step-by-Step (High Level)
Follow these steps to properly complete and file IRS Form 1127 (2018) to increase the likelihood of approval:
- Determine eligibility: Verify that IRS Form 1127 is appropriate for your case and not another extension form, such as Form 4868 for filing or Form 9465 for installment payments.
- Gather financial documentation: Prepare a complete statement of assets and liabilities, along with income and expense details for the previous three months.
- Complete the form: Provide your name, Social Security number, tax period, and a detailed explanation showing how immediate payment would create undue hardship.
- Attach all necessary information: Include all required financial records, and ensure that the certification boxes are checked to confirm that all documents are attached.
- Sign and submit: Both spouses must sign joint filings and send the form to the appropriate address before the original due date to be considered timely.
- Retain copies: Keep a complete record of the filing, including proof of mailing and supporting documents, in case the IRS reviews your application.
If you can’t pay your full tax debt, an IRS Offer in Compromise may allow you to settle for less.
Common Mistakes and How to Avoid Them
Taxpayers can prevent delays or denials by avoiding these frequent errors when filing IRS Form 1127 (2018):
- Missing or incomplete documentation: Always include complete financial statements that show income, expenses, assets, and liabilities; missing details often result in an automatic rejection.
- Vague hardship explanations: Provide a detailed description of your financial situation, explaining how immediate payment would cause measurable loss or create significant economic difficulties.
- Using the wrong form: Confirm that Form 1127 applies to your situation and not an extension to file or an installment agreement form, which serve different purposes.
- Late submission: Ensure the form arrives before the tax payment due date to avoid penalties, deposit penalty charges, and rejection by the IRS.
- Unrealistic payment timeline: Request a reasonable extension period based on your ability to gather funds and resolve your financial hardships.
- Missing signatures: Verify that both spouses sign joint tax returns before submission to prevent processing delays or denial of the request.
If you have unfiled federal income tax returns, resolve them promptly to prevent further IRS penalties.
What Happens After You File Form 1127 (2018)
After you submit IRS Form 1127 (2018), the IRS reviews your application on a case-by-case basis. If the IRS approves your request, you will receive written confirmation granting an extension of time to pay your tax liabilities. Interest will continue to accrue on any unpaid tax balance until the full amount is paid. If the application is denied, taxpayers may pursue alternatives such as installment agreements or administrative waiver requests. Monitor your payment deadlines closely to avoid late payment penalties and ensure compliance with federal tax obligations.
For assistance with IRS Form 1127 or payment extension options, contact us for IRS Form 1127 support.
FAQs
Can I use IRS Form 1127 (2018) to request a tax payment extension?
Yes, IRS Form 1127 allows taxpayers to request an extension of time for payment if paying taxes by the original due date would cause financial hardship. The Internal Revenue Service reviews each request carefully and may approve it if you provide proper financial documentation during your tax filing.
Does IRS Form 1127 (2018) provide penalty relief?
Not directly, the form does not remove or reduce any estimated tax penalty that accrues on unpaid amounts. However, it may prevent additional collection actions while the Internal Revenue Service reviews your request for a temporary payment extension during the tax filing process.
Can I apply for tax relief through IRS Form 1127 (2018)?
Yes, but only in limited situations. The form provides temporary tax relief by postponing payment due to verified financial hardship, not by reducing what you owe. The Internal Revenue Service considers your overall financial records and may approve the request after reviewing your tax filing.
How long is the extension of time granted by the IRS?
The extension of time typically lasts up to six months for taxes shown on your return. In exceptional cases, the IRS may grant longer periods for certain tax types. Interest and estimated tax penalty charges still apply until payment is completed.
