Form 1127 (Rev. December 2015) Checklist
Tax Year 2015
Purpose & 2015 Context
Form 1127 requests an extension of time to pay tax due to undue hardship under IRC section 6161. The 2015 instructions clarified that extension periods for deficiencies remained limited to 18 months from the date payment is due, with a possible additional 12-month grant in exceptional circumstances. This form applies to specific tax types and requires a demonstration of substantial financial hardship beyond mere inconvenience.
Completion Steps
1. Identify Your Taxpayer Classification and Eligible Tax Type
Enter your name, address, and social security number (individuals) or employer identification number (businesses). Verify the tax you owe qualifies under Form 1127 scope: income tax, self-employment tax, withheld taxes on nonresident aliens or foreign corporations, taxes on private foundations and specific other tax-exempt organizations, taxes on qualified investment entities, taxes on greenmail, taxes on structured settlement factoring transactions, or gift taxes. For deficiency-based requests, cite the notice and demand for payment issued by the IRS.
2. Complete Part I: Request for Extension with Correct Due Dates
Enter the original due date of your return (excluding filing extensions) or the payment due date shown in your deficiency notice. The proposed payment date must not exceed 6 months from the return due date for the tax shown on the return. If you are out of the country, extensions exceeding 6 months may be granted, except for taxes under sections 4981, 4982, and 5881.
For deficiency amounts, the proposed payment date must not exceed 18 months from the date the deficiency payment is due. In exceptional circumstances only, an additional 12 months may be requested.
Enter the exact dollar amount of tax owed and check the box indicating whether this request covers tax shown on a return or an amount determined as a deficiency. Specify the form number (1040, 1120, 941, etc.) and indicate the calendar or fiscal year.
3. Demonstrate Undue Hardship in Part II with Detailed Narrative
Write a detailed explanation of the undue hardship that will result if the extension is denied. “Undue hardship” means more than inconvenience—you must demonstrate substantial financial loss if forced to pay the tax on the due date, such as being forced to sell property at a sacrifice price.
Generic statements like “I cannot afford to pay” are insufficient. Provide specific details about your financial situation, assets you would need to liquidate, losses you would incur, and why payment at the due date would cause irreparable economic harm. Attach additional sheets if necessary.
4. Prepare Statement of Assets and Liabilities as of Last Month-End
Compile a complete accounting of all assets and liabilities as of the end of the calendar month immediately before the tax due date. List each asset individually with both book value and current market value. For securities, indicate whether they are listed (publicly traded) or unlisted (closely held or private).
Include all asset categories: real property, personal property, cash and cash equivalents, investment accounts, business interests, and vehicles. List all liabilities, including mortgages, loans, credit card debt, business obligations, and other amounts owed.
5. Compile the Itemized Income and Expense Statement for the Three Months Prior
Prepare detailed, month-by-month itemized lists of all income and expenses for each of the three full calendar months immediately preceding the tax due date. Document all income sources: wages, salary, self-employment income, investment income, rental income, and business revenue. Categorize all expenses: housing costs, utilities, food, transportation, insurance, medical expenses, business operating costs, and debt service payments.
Generic summaries are not acceptable; provide specific, itemized documentation for each month.
6. Verify Both Certification Boxes in Part III Are Checked
Confirm you have checked both required certification boxes in Part III. The first certifies that you have attached a statement of assets and liabilities, showing both book and market values, with a notation indicating whether securities are listed or unlisted. The second certifies that you have attached itemized income and expense lists for the three months preceding the certification. Both certifications must be checked, or your application will not be accepted.
7. Execute Required Signatures with Dates
Sign and date the form personally. All signatures must be original—photocopied, stamped, or electronic signatures are not acceptable. If the request relates to a joint return or joint tax liability for a deficiency, both spouses must sign and date the form. If one spouse cannot sign, consult IRS Publication 501 for guidance. Tax preparers must also sign, date, and provide identifying information.
8. File with the Correct Office Before the Deadline
Submit completed Form 1127 with all supporting documentation to the Internal Revenue Service (Attn: Advisory Group Manager) for the area where you maintain your legal residence or principal place of business. Use IRS Publication 4235, Collection Advisory Offices Contact Information, to locate the correct Advisory Group address.
Important exception: If the tax due is gift tax reportable on Form 709 or Form 709-NA, send Form 1127 to the designated Service Center. Gift tax applications follow centralized processing procedures separate from other tax types.
The form must be received on or before the return due date (excluding filing extensions) to pay the tax shown on the return. For deficiency amounts, payment must be received by the payment due date specified in the IRS notice and demand.
9. Understand Interest and Penalty Consequences
Interest accrues on unpaid tax from the original due date through the date of actual payment, regardless of whether an extension is granted. Granting an extension does not stop interest from accruing—it only prevents specific penalties from being incurred.
Penalties may be imposed if you fail to pay the tax within the extension period granted. Extensions to pay deficiencies will not be granted if the deficiency is attributable to negligence, intentional disregard of rules and regulations, or fraud with intent to evade tax.
10. Monitor the Extension Period Limits and Pay Timely
For tax shown on a return, the maximum extension is generally 6 months from the original due date. Longer extensions may be granted if you are outside the United States, with exceptions for certain specific taxes.
For deficiency amounts, the extension is limited to 18 months from the date payment is due. An additional 12 months may be granted only in exceptional circumstances, for a maximum total of 30 months.
Pay all extended taxes before the extension expires. Do not wait for a bill from the IRS—track your extension expiration date and remit payment proactively to avoid late fees.
2015 Year-Specific IRS Updates
Deficiency Extension Cap: The 2015 instructions reaffirmed that extensions to pay deficiencies are generally limited to 18 months from the date payment is due, with no additional extension unless exceptional circumstances exist. Extensions are denied if the deficiency results from negligence, intentional disregard, or fraud.
Asset and Liability Statement Requirements: The 2015 form required a complete statement of assets and liabilities showing both book value and market value, with a notation of whether securities are listed or unlisted.
Three-Month Income and Expense Documentation: The 2015 instructions specified that itemized lists of income and expenses for each of the three full calendar months immediately before the tax due date must be provided.
Gift Tax Filing Procedures: Form 1127 applications for gift taxes on Form 709 or 709-NA are processed centrally and are not filed with local Advisory Group Managers.
Key Requirements Summary
• Form 1127 is for payment extensions only, not filing extensions
• Both supporting documentation boxes must be checked
• Undue hardship must show substantial financial loss, not mere inconvenience
• Asset/liability statements and 3-month income/expense records are mandatory
• Original signatures required from all applicable parties
• Gift tax applications follow centralized Service Center processing
• Other tax types file with the local Advisory Group Manager per Publication 4235
• Interest continues to accrue during any extension period granted
• Extensions denied if deficiency results from negligence or fraud
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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.
