FORM 1127 (REV. DECEMBER 2024) – 2016 TAX YEAR CHECKLIST
Purpose
Form 1127 is used to request an extension of time to pay federal taxes when immediate payment would cause undue hardship. It applies to any tax year in which tax is due and the taxpayer can demonstrate that paying on time would result in a substantial financial loss. The application must be filed before the original return due date or the tax payment due date to be considered. This form extends the time to pay, not the time to file a return.
Eligibility and Appropriate Use
Verify Form 1127 is the correct IRS form for your situation
Form 1127 may be filed if you need additional time to pay:
- The full amount of tax shown or required to be shown on a return that is due, or
- An amount assessed as a deficiency following an IRS examination
This form is strictly for payment extensions.
Do not use Form 1127 if you need
- A filing extension for income tax returns (use Form 4868 or Form 2350 if abroad)
- An extension to pay estate tax or generation-skipping transfer tax (use Form 4768)
- An installment agreement to pay over time (use Form 9465 or apply online through the IRS)
Covered Tax Types
Identify which federal taxes qualify for Form 1127
Form 1127 may be used to request an extension of time to pay the following federal taxes:
- Federal income tax
- Self-employment tax
- Withheld taxes on nonresident aliens and foreign corporations
- Private foundation taxes and certain tax-exempt organization taxes
- Qualified investment entity taxes
- Gift tax and generation-skipping transfer tax reported on Form 709 or Form 709-NA
In Part I, specify the applicable tax form number (for example, Form 1040, 1065, 1120, 709, or 709-NA) and clearly identify the tax year involved.
Establishing Undue Hardship
Provide detailed documentation of financial hardship
The IRS defines undue hardship as more than inconvenience. You must show that paying the tax by the due date would cause substantial financial loss, such as being forced to sell assets at a sacrifice price. In Part II, provide a clear and specific explanation of your financial circumstances and why payment by the due date is not possible.
Acceptable hardship explanations must include concrete facts and financial details. General statements about cash flow problems or temporary difficulty are insufficient. The IRS requires evidence that timely payment would result in significant and unavoidable financial harm.
Required Supporting Documents
Attach a complete assets and liabilities statement
Include a statement of assets and liabilities dated as of the last day of the month immediately preceding the tax payment due date. This statement must list:
- All assets with both book value and fair market value
- Securities identified as listed or unlisted
- All liabilities, including loans, accounts payable, and other debts
Include three-month income and expense documentation
Attach detailed income and expense records for the three calendar months immediately preceding the payment due date. These records should be itemized and complete.
Both the assets and liabilities statement and the three-month income and expense documentation are mandatory. Failure to include either may result in automatic rejection of the application.
Completing the Application
Fill out Part I with accurate tax information
Part I must be completed carefully and accurately. Include:
- The original return due date (excluding any filing extensions) or the deficiency payment due date
- The proposed date by which you expect to pay the tax
- The total amount of tax owed
- The applicable IRS form number associated with the tax
- The tax year involved (calendar year or fiscal year)
You must indicate whether the request relates to tax shown on a return or to a deficiency determined by the IRS.
Signature and Authorization
Ensure proper signatures on the application
- Individuals: The taxpayer must sign and date the form
- Joint liability: Both spouses must sign
- Paid preparer involved: The preparer must also sign
- Businesses/entities: An authorized representative must sign and date the form
Missing or incomplete signatures may delay processing or result in the denial of your request.
Where to File Form 1127
Submit to the correct IRS Collection Advisory Office
For income tax, self-employment tax, and most other taxes, Form 1127 must be filed with the IRS Collection Advisory Office serving your legal residence or principal place of business. The correct office can be identified using Publication 4235, which lists Collection Advisory Office contact information.
Special filing address for gift tax extensions (Forms 709 and 709-NA)
Department of the Treasury
Internal Revenue Service
Stop 824G
7940 Kentucky Drive
Florence, KY 41042-2915
All gift tax payment extension requests must be sent to this address, regardless of the taxpayer's location.
Extension Time Limits
Know the maximum extension periods allowed
- Tax shown on returns: The Maximum extension is generally six months from the original return due date
- Taxpayers outside the U.S.: Longer extensions may be available, except for certain excise taxes
- Deficiencies after IRS examination: Maximum extension is generally 18 months from the payment due date
- Exceptional circumstances: An additional 12 months may be granted (up to 30 months total)
No extension will be granted for deficiencies resulting from negligence, intentional disregard of rules or regulations, or fraud with intent to evade tax.
Interest and Penalties
Understand ongoing interest charges and penalty risks
Interest accrues on unpaid tax from the original due date until the tax is paid in full, even if an extension is granted. An approved Form 1127 does not stop interest from accruing. If you fail to pay by the end of the approved extension period, additional penalties may apply. Meeting the extended deadline helps reduce added costs and enforcement risk.
Filing Deadlines
Submit Form 1127 before critical deadlines.
Form 1127 must be filed as soon as you determine that timely payment would cause undue hardship.
- Tax shown on a return: The application must be received by the IRS on or before the original return due date (without regard to filing extensions)
- Deficiencies: The application must be received on or before the payment due date shown in the IRS notice and demand for payment
Applications received after the deadline are generally denied automatically.
Payment Responsibility
Take action to pay before the extension expires.
You remain responsible for paying the full amount of tax, plus accrued interest, before the end of the approved extension period. The IRS will not automatically bill you when the extension expires. Track the extended due date and ensure payment is made on time.
Summary
Form 1127 (Rev. December 2024) provides a formal process to request additional time to pay federal taxes when immediate payment would cause undue hardship. Approval depends on the timely filing of complete financial documentation and a clear demonstration of a substantial financial loss. The form does not eliminate interest charges and does not replace filing requirements. Careful preparation and adherence to IRS requirements are essential for a successful request.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
