IRS to Waive $1 Billion in Tax Penalties—Find Out If You Qualify

321

On Tuesday, the IRS announced its intention to exempt individuals who failed to settle back taxes amounting to less than $100,000 annually for the tax years 2020 and 2021 from penalty fees. 

Approximately 5 million individuals, businesses, and tax-exempt entities, primarily with incomes below $400,000 per year, will qualify for this relief, amounting to approximately $1 billion, according to the agency.

The decision to forgive failure-to-pay penalties is attributed, in part, to the temporary suspension of automated reminders for overdue tax payments during the pandemic, initiated in February 2022, as stated by the leadership of the IRS.

The tax agency has opted to waive fees in response to the disruptions inflicted by the pandemic, which significantly disrupted the operational functioning of the IRS, resulting in a substantial backlog of unprocessed tax returns. 

This relief is designed to address the predicament arising from the IRS’s decision to suspend notifications to taxpayers regarding outstanding debts. Despite the absence of such notifications, penalties continued to accrue for taxpayers in arrears.

While the IRS intends to resume its regular practice of issuing collection notices, the announcement signifies a one-time relief measure prompted by the unparalleled disruptions caused by the pandemic, according to officials.

Eligibility for IRS Penalty Relief

IRS-To-Waive-$1-Billion-In-Tax-Penalties-Find-Out-If-You-Quality
On Tuesday, the IRS announced its intention to exempt individuals who failed to settle back taxes amounting to less than $100,000 annually for the tax years 2020 and 2021 from penalty fees.

Taxpayers automatically qualify for penalty relief if they submitted a tax return (Form 1040, 1041, 1120 series, or Form 990-T) for the tax years 2020 or 2021, owe less than $100,000 per annum in overdue taxes, and received an initial balance-due notice between February 5, 2022, and December 7, 2023. 

In the event individuals have already paid the failure-to-pay penalty, a refund will be issued, as conveyed by Werfel during a teleconference with reporters. Emphasizing the IRS’s support for taxpayers, Werfel stated, “People need to know the IRS is on their side.”

The majority of the approximately 5 million individuals, businesses, and tax-exempt organizations qualifying for this relief have annual incomes below $400,000, as affirmed by the IRS.

Comment via Facebook

Corrections: If you are aware of an inaccuracy or would like to report a correction, we would like to know about it. Please consider sending an email to [email protected] and cite any sources if available. Thank you. (Policy)


Comments are closed.