The IRS is waives penalties and fees for qualified individuals and corporations who filed but could not pay taxes in 2020 and 2021 tax years. This is significant relief as the IRS expects to waive “billions” in penalties and fees. Penalties and fees are substantial for many taxpayers, and this program will be a welcome relief.
Who Qualifies For Relief
- Taxpayers must have filed 1040, 1041, 1120 series, or 990-T form.
- Must have filed in 2020 or 2021.
- Must have received an initial notice of balance due between 2/5/2022 and 12/7/23.
- Total back taxes owed must be less than $100,000 per year.
The IRS was initially overwhelmed by the pandemic and suspended notices of tax debts in 2020 and 2021. Because of this failure to send out notices, the IRS deemed it unfair to assess penalties. The IRS characterizes this waiver of penalties as a one-time relief based on “unprecedented” events.
Taxpayers Should Verify Automatic Waivers
The IRS will automatically waive penalties and fees for qualifying taxpayers for 2020 and 2021. Taxpayers should check their transcript to ensure that penalties assessed in 2020 and 2021 are waived if they qualify. If it appears that the IRS has made an error and failed to waive penalties and fees, taxpayers should contact and work with a tax professional.
If You Have Paid a Penalty for 2020 or 2021
If you have already paid a penalty for tax years 2020 or 2021, the IRS will issue a refund. This refund will be used to satisfy tax debt in other years or will be refunded directly to the taxpayer.
If You Have Unpaid Tax Debt
While waiving penalties and fees accrued during the pandemic is necessary assistance, many taxpayers still have unpaid tax balances for these years. Several good options are available for taxpayers with unpaid taxes, including installment plans and compromise agreements. Contact Highland Tax Resolution to discuss how we can help address or alleviate your tax concerns.