What is Form 1127?
Form 1127, Application for Extension of Time for Payment of Tax Due to Undue Hardship, is an Internal Revenue Service (IRS) form used to apply for an extension of the deadline given to pay taxes, citing particular undue hardships as the reason for why an extension is necessary. The form asks for some identifying information, such as the filer’s name and address, and requires supporting documents proving the validity of the cited “undue hardship” to be attached to the form on submission.
While the deadlines by which a person must file and pay their taxes are in most cases very strict, there are certain situations that may cause the taxpayer undue hardship if they were to pay their taxes at the originally assigned time. “Undue hardship” is generally considered to be any factor or otherwise that may cause the taxpayer substantial financial loss upon paying their taxes, or that may make it impossible or extremely difficult for taxpayers to pay their taxes.
When IRS Form 1127 is filed and approved by the IRS, no late payment penalty will be charged to the taxpayer for the duration of the extension. However, the full tax bill must still be paid, and interest will still be accumulated over the duration of the requested extension.
Who needs to use Form 1127?
The IRS Form 1127 extension is used by taxpayers who have experienced or are experiencing any kind of undue hardship related to paying any of the following taxes:
- Income taxes
- Self-employment income taxes
- Withheld taxes on nonresident aliens and foreign corporations
- Taxes on private foundations and certain other tax-exempt organizations
- Taxes on qualified investment entities
- Taxes on greenmail
- Taxes on structured settlement factoring transactions
- Gift taxes
Take note that the IRS tax form 1127 should only be filed if the taxpayer is requesting to postpone payment of the full amount of tax shown or required to be shown on your return or an amount determined as a deficiency. Check the determination chart in the instructions on page 3 of this form for more details.
How to fill out Form 1127?
Form 1127 is a very simple form to fill out. If you download a copy of the form online, make sure that it is in PDF format to ensure that the format and contents remain the same regardless of how it is submitted or opened. Have the relevant documents that prove the validity of your cited difficulty prepared so that the correct information can be entered in the correct areas, and so they can be submitted attached to the IRS 1127 form.
If you need extra details on particular steps on the form, you may consult the instructions for Form 1127 on pages 3 and 4 of this form.
Name(s) as Shown on Return
Enter the full legal name of the taxpayer(s) as shown on the relevant tax return.
Number, Street, and Apartment, Room, or Suite Number
Enter the taxpayer(s’) number, street, and apartment, room or suite number. If the post office does not deliver to the given street address, enter the taxpayer(s’) P.O. box number.
City, Town, or Post Office, state, and ZIP Code.
Enter the taxpayer(s’) city, town, or post office, state, and ZIP code. If the address is a foreign address, enter the information in the following order: city, province or state, and country, and follow the country’s practice for entering the postal code. Do not abbreviate the name of the country.
Part I - Request for Extension
Due Date of Return
Enter the original due date of the concerned return (not including any extensions), or the date by which the amount determined as deficiency must be paid.
Enter the proposed date by which the tax will be paid.
Amount of Tax Owed
Enter the amount of tax to be paid.
Purpose of Request
Check only one of the boxes that applies to what this request is being filed for. You may choose from:
- The tax shown or required to be shown on (enter the relevant form in the space provided)
- An amount determined as a deficiency on (enter the relevant form in the space provided).
Year of Request
Enter the calendar year and the end date of the fiscal year that this request is being made for.
Part II - Reason for Extension
Enter a description of the undue hardship that paying your tax at the original due date will cause, and the reason why an extension is being requested. Make sure that the explanation is as clear and concise as possible. You may use an extra sheet of paper if necessary.
Check the description of what constitutes “undue hardship” on page 3 of this form if you are unsure if the issue you are experiencing will be considered valid.
Part III - Supporting Documentation
Both boxes in this section must be checked, or else the application for an extension will not be accepted. Make sure that both of the following boxes apply and are checked:
- A statement of the taxpayer(s’) assets and liabilities at the end of last month is attached to this form
- An itemized list of the taxpayer(s’) income and expenses for each of the 3 months prior to the original due date of the tax is attached to this form.
Signature and Verification
Have the taxpayer, spouse, and any other preparer other than the taxpayer sign the form on the space provided, then enter the date that each of them signed the form.
Tips when filling out Form 1127
While Form 1127 is simple to fill out, it is very important to make sure that all information entered is accurate and complete, so it may be beneficial to double-check the form after it has been accomplished.
Make sure all information entered is correct, and that the form is submitted to the appropriate place on time. This will help avoid any consequences for giving the IRS the wrong information and ensure that your application is processed properly.
Practice good contract management. Make sure to keep a copy of the form in a safe and organized area, or even copy it again in order to be doubly sure that you have a backup in case the original is damaged in some way. This will be useful for possible legal purposes in the future, or even simply as a record.