Today TaxMama hears from IRS, who answered some questions for tax professionals: “My client received a balance due notice on their 2005 return? Why were they charged interest from 4/15/06 when the due date was extended to 4/17/06?”
According to the Internal Revenue Manual, section 22.214.171.124 (IRM 126.96.36.199), a tax liability must be paid on or before the due date to avoid debit interest accruals. Since Internal Revenue Code section 7503 states that if the last day prescribed for the performance of any act falls on a Saturday, Sunday or legal holiday, the performance of the act on the next workday is considered timely.
However, the code section 7503 does not provide for a new due date.
So, if the liability is paid in full by the first succeeding workday no interest is charged; but if the liability is not paid in full by the first succeeding workday, interest is charged from the actual due date of the return (which in this case was 4/15/06).
TaxMama comments – Well, the difference in interest is often only pennies or a very few dollars, depending on the balance owed. After all, you’re only talking about, at most, 3 days (if Monday were also a holiday for some reason). Even if the balance owed were as much as $20,000 – this would add less than $12 to the total interest. Interesting, but not worth fighting over. And remember, you can find answers to questions about late payments and all kinds of tax issues, free. Where? Where else? At TaxMama.com
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- Internal Revenue Manual (IRM) 188.8.131.52 :: Regarding payment of tax liabilities