The IRS has made a big move to help folks dealing with overdue taxes, announcing fresh penalty relief for around 4.7 million individuals, businesses, and tax-exempt groups who missed automated collection reminder notices during the pandemic.
This relief totals about $1 billion and mostly targets those earning under $400,000 annually.
The COVID-19 chaos led the IRS to pause sending automated reminders for overdue tax payments from February 2022. These reminders usually came after the initial notice, and even though they stopped during the pandemic, the penalty for not paying taxes continued to grow for those who hadn’t settled their bills after the first notice.
To assist those grappling with unpaid taxes, the IRS is gearing up to restart normal collection notices for the 2020 and 2021 tax years. They’re taking steps in advance to help these taxpayers, even those who haven’t heard from the IRS in over a year.
Next month, the IRS will start sending out special reminder letters, informing taxpayers about what they owe, easy payment options, and any penalty relief they might receive. If you’re struggling to cover the full amount, contact Morris And Associates for help contacting the IRS and possibly reduce the amount owed to the IRS.
Eligible taxpayers affected by this situation for tax years 2020 and 2021 might also get their failure-to-pay penalties waived. An estimated 5 million tax returns, belonging to 4.7 million individuals, businesses, trusts, estates, and tax-exempt groups, could qualify for this relief. That’s a hefty $1 billion in savings overall, averaging around $206 per return.
The relief is being rolled out in phases, starting with individual accounts and then moving to business accounts from late December to early January, followed by trusts, estates, and tax-exempt organizations from late February to early March 2024. Almost 70% of the individuals benefiting from penalty relief earn less than $100,000 annually.
The IRS has put out Notice 2024-7PDF, detailing how they’re offering penalty relief to eligible taxpayers impacted by COVID-19, aiming to help them meet their federal tax responsibilities.
IRS Commissioner Danny Werfel emphasized the importance of supporting taxpayers who might be caught off guard by suddenly receiving a substantial tax bill. The relief is automatic, so eligible taxpayers don’t need to do anything to receive it. Even those who’ve already paid their full balance will benefit; the IRS will issue a refund or credit it towards any other outstanding tax liability.
This relief applies to eligible taxpayers with assessed tax under $100,000 and covers certain income tax returns filed for tax years 2020 or 2021. The failure-to-pay penalty will resume on April 1, 2024, for those who qualify for relief.
For those not covered by this automatic relief, alternative penalty relief options are available. If you need help, Morris And Associates are experts finding tax relief for those who owe penalties and back-taxes.
If the relief results in a refund or credit, taxpayers can check their tax transcript to confirm. Refunds will start going out from now through January 2024. If you don’t receive a refund, expect a special reminder notice with your updated balance in early 2024. Questions about penalty relief can be directed to the IRS after March 31, 2024.
Get Compliant and Get Tax Relief
Morris and Associates are experts when it comes to helping individuals and companies find tax relief in Georgia but can help no matter where you live or whatever tax questions you have. Contact us to help with your taxes and possibly even reduce the amount that you owe.
