NEW YORK (CNNMoney) -- The IRS is offering some relief to taxpayers struggling to pay their taxes due to unemployment or a significant loss of income.
The agency said Wednesday it will give certain taxpayers a six-month grace period on "failure-to-pay" penalties, which are typically assessed each month a taxpayer is late paying their taxes.
Without the grace period, a taxpayer who is late paying their taxes initially incurs a fee of 0.5% of their tax bill. That fee may increase the later they become -- with a cap of 25%. But now some taxpayers won't incur any fees until Oct. 15.
Even though taxpayers won't get hit with the penalty, they will still accrue interest during the six-month period. Over the course of a year, that amounts to about 3% of the annual tax bill.
Taxpayers who qualify for this grace period must have been unemployed for 30 consecutive days or longer during 2011 or 2012 -- up to the April 17 filing deadline this year. Self-employed taxpayers who saw their business income drop 25% or more due to the economy are also eligible.
There is an income limitation, however. Married taxpayers who file jointly cannot claim income that exceeds $200,000, while a taxpayer who files as single or head of household must not exceed $100,000 in income. Those who are still eligible for the relief will need to complete Form 1127A, available on the IRS website.
"We have an obligation to work with taxpayers who are struggling to make ends meet," said IRS Commissioner Doug Shulman.
In addition to the penalty relief, the IRS is also allowing more taxpayers to spread out payments on their tax bills. Taxpayers with bills as high as $50,000 are now eligible for installment payments -- up from a previous cap of $25,000. And these taxpayers aren't required to file a financial statement to do so.
Taxpayers who owe more than $50,000, however, still need to fill out a Collection Information Statement in order to qualify.
The IRS also boosted the maximum installment term to 72 months, up from 60 months. Taxpayers entering these new installment agreements are required to sign up for monthly direct debit payments. And interest is still charged on the outstanding balance.
The new efforts announced Wednesday are an expansion of an ongoing effort started in 2008 aimed at helping taxpayers who are struggling to pay their taxes.
|Latest Tesla fire caused by running over a metal object|
|Porn-viewing bosses infect corporate networks|
|Chrysler recalls 1.2 million trucks|
|Twitter stock already downgraded|
|What shutdown? Job growth strong in October|
Carlos Rodriguez is trying to rid himself of $15,000 in credit card debt, while paying his mortgage and saving for his son's college education.
Susan Carson and Laura DeLallo make $225,000 and have half a million in retirement savings, but their sprawling portfolios is proving hard to manage.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.48%||4.38%|
|15 yr fixed||3.49%||3.42%|
|30 yr refi||4.47%||4.37%|
|15 yr refi||3.48%||3.41%|
Today's featured rates: