In December, the IRS announced they would offer about 4.7 million taxpayers penalty relief for back taxes. Most of the impacted individuals make under $400,000 annually.
During the COVID-19 pandemic, the IRS temporarily suspended automated reminders to pay tax bills. As a result, individuals didn’t receive notice of the bills but the interest (and penalties accrued). The penalty relief is one step the IRS is putting in place as they begin to resume reminders for back taxes from 2020 and 2021.
According to Moneywise, Danny Werfel, the IRS commissioner, stated, “We have been concerned about taxpayers who haven’t heard from us in a while suddenly getting a larger tax bill…and this penalty relief is a common-sense approach to help people in this situation.”
Who Will Get the Penalty Relief?
The penalty relief will apply to any taxpayers (including individuals, businesses, trusts, and more) who filed “certain Forms 1040, 1120, 1041 and 990-T income tax returns for tax years 2020 or 2021, with an assessed tax of less than $100,000, and that were in the IRS collection notice process — or were issued an initial balance due notice between Feb. 5, 2022, and Dec. 7, 2023.”
Do You Have to Take Action to Get the Relief?
You do not have to do anything if you are eligible for this penalty relief. The IRS will automatically apply the relief to your account. And, if you’ve already paid your penalty fees, the IRS will either refund the amount or apply your payment to another tax bill of yours.
What Other Relief Options Are Available?
Even if you’re not eligible for this relief option, it’s important to note that the IRS has other options available, such as payment plans.
Looking for help with your taxes? Contact Highland Tax Group to see how we can help.