While millions of Americans had to file their taxes by April 15, this year all residents of Los Angeles County are getting an automatic extension until Oct. 15 to file and pay their federal and state taxes in consideration for the impact of LA’s wildfires.
The Internal Revenue Service (IRS) and the state of California announced the six-month extension in January.
“When you’re talking about postponement of deadlines for disasters, the extension applies to anybody with an address of record in the county,” said Raphael Tulino, a spokesperson for the IRS. Regarding taxpayers who owe taxes this year and are worried about accruing interest or penalties, he explained that the “Oct. 15 deadline is no different from the April 15 deadline.”
Tulino did note that LA County taxpayers can choose to file their taxes before the new October deadline, in particular if they expect to receive a tax refund and want to receive it sooner.
Beware of Tax Scams
The IRS regularly releases an overview of the top “Dirty Dozen” tax scams from the previous year to alert taxpayers about schemes that can put them at risk of losing money or personal information. Some of the top recurring scams include phishing scams, when scammers impersonate IRS agents requesting personal information via text or email; inaccurate tax advice circulating on the internet and social media, especially on TikTok, including false tax credit claims and self-employment tax credits; and fake charitable organizations seeking donations.
Another big potential pitfall is companies that offer misleading “offer in compromise” (OIC) deals for taxpayers who have unpaid tax balances they owe the IRS. The businesses – typically referred to as “OIC mills” – often heavily advertise via radio and television and make exaggerated claims about their ability to settle a person’s tax debt for pennies on the dollar.
In many cases, warns the IRS, taxpayers may end up paying excessive fees for information they could have obtained for free, only to discover that they do not qualify for an OIC arrangement.
Taxpayers can seek OIC agreements by communicating directly with the IRS to try to settle their tax debt for less than the full amount they owe without involving a third party, according to IRS Commissioner Danny Werfel. While not every taxpayer will qualify for an OIC, the IRS takes into consideration each individual’s unique case and circumstances, including financial hardship.
“Some unscrupulous promoters mislead taxpayers into thinking they can magically get rid of a tax debt,” said Werfel. “This [OIC] is a legitimate IRS program, but there are specific requirements for people to qualify. People desperate for help can make a costly mistake. … Before using an aggressive promoter, we encourage people to review readily available IRS resources to help resolve a tax debt on their own without facing hefty fees.”
To learn if you may qualify for an Offer in Compromise with the IRS, go to: irs.treasury.gov/oic_pre_qualifier.