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                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, April 8, 1993                   TAG: 9304080087
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A8   EDITION: METRO 
SOURCE: The Washington Post
DATELINE: WASHINGTON                                LENGTH: Medium

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IRS EASES PENALTY FOR LATE TAX FILERS

The Internal Revenue Service on Wednesday said it will give late-filing taxpayers a break. Those who request an extension by April 15 but can't pay all the taxes they owe at that time will be given until Aug. 15 to file their returns and will not have to pay the IRS' 5 percent-a-month failure-to-file penalty.

But that doesn't mean a free ride for late filers. The tax agency will continue to assess interest at an annual rate of 7 percent on any unpaid taxes. And for those who don't pay at least 90 percent of their total tax liability by April 15, a 0.5 percent per month late-payment penalty will be applied.

In waiving the failure-to-file penalty, "we are trying to address what could be a barrier to filing a return," said an IRS spokesman. He said the agency has found that under its previous rules some taxpayers who found they owed more than they could immediately pay ended up failing to file altogether.

The change is not expected to cost the Treasury any revenue because the IRS believes lost penalties will be offset by improved compliance. Typically, 5 million extensions are granted each year, the agency spokesman said. The new rules come as an extraordinary number of taxpayers are expected to owe money April 15 as a result of President Bush's adjustment of withholding tables last year. That change, aimed at stimulating the economy, meant less money was withheld from paychecks last year so that taxpayers are now getting smaller refunds or are having to pay.

Partly as a result, tax returns are coming in much more slowly than in the past and the average refund size is slipping.

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