35.7 Extension To Pay Your Tax When Entering the Service

If you are unable to pay your income taxes when you enter the Armed Forces (whether they became due before or during your military service), you may get an extension until 180 days after leaving the military to pay the tax, provided that you apply for the extension after receiving a notice from the IRS asking for payment. Your request must show that your ability to pay has been materially affected because of your military service. If the request is granted and you pay the entire tax due by the end of the postponement period, no interest or penalties will be charged for that period.

The extension does not cover your spouse, who must file a separate return and pay the tax due. But you and your spouse may file a joint return before the postponement period expires even though your spouse filed a separate return for that particular year.

Automatic extension of time to file your return.

If you are on duty outside the U.S. or Puerto Rico on April 15, 2013, you get an automatic two-month extension to file your 2012 return; see page 6.

Interest charged on back taxes.

If you do not show hardship qualifying you for the above interest-free payment extension, the IRS may reduce its interest rate on the deficiency if your service affected your ability to pay. The maximum interest rate the IRS may charge for taxes incurred prior to your entry into active service is 6%. This reduced rate applies only to interest charged during the period of your active duty.