The penalty relief only applies to eligible taxpayers with assessed tax under $100,000. Eligible taxpayers who already paid their full balance will benefit from the relief, too if a taxpayer already paid failure-to-pay penalties related to their 20 tax years, the IRS will issue a refund or credit the payment toward another outstanding tax liability. Eligible taxpayers don't need to take any action to get it. "We are taking other steps to help taxpayers with past-due bills, and we have options to help people struggling to pay." The IRS should be looking out for taxpayers, and this penalty relief is a common-sense approach to help people in this situation," said IRS Commissioner Danny Werfel. "As the IRS has been preparing to return to normal collection mailings, we have been concerned about taxpayers who haven't heard from us in a while suddenly getting a larger tax bill. The IRS is releasing Notice 2024-7, which explains how the agency is providing failure-to-pay penalty relief to eligible taxpayers affected by the COVID-19 pandemic to help them meet their federal tax obligations. Nearly 70 percent of the individual taxpayers receiving penalty relief have income under $100,000 per year. This represents $1 billion in savings to taxpayers, or about $206 per return.Īs a first step, the IRS has adjusted eligible individual accounts and will follow with adjustments to business accounts in late December to early January, and then trusts, estates and tax-exempt organizations in late February to early March 2024. The IRS estimates 5 million tax returns - filed by 4.7 million individuals, businesses, trusts, estates and tax-exempt organizations - are eligible for the penalty relief. The IRS is also taking steps to waive the failure-to-pay penalties for eligible taxpayers affected by this situation for tax years 20. The IRS urges taxpayers who are unable to pay their full balance due to visit IRS.gov/payments to make arrangements to resolve their bill. The letter will alert the taxpayer of their liability, easy ways to pay and the amount of penalty relief, if applied. To help taxpayers as the normal processes resume, the IRS will be issuing a special reminder letter starting next month. Given this unusual situation, the IRS is taking several steps in advance of resuming normal collection notices for tax years 20 to help taxpayers with unpaid tax bills, including some people who have not received a notice from the IRS in more than a year. Although these reminder notices were suspended, the failure-to-pay penalty continues to accrue for taxpayers who did not fully pay their bills in response to the initial balance due notice. These reminders would have normally been issued as a follow up after the initial notice. Most of those receiving the penalty relief make under $400,000 a year.ĭue to the unprecedented effects of the COVID-19 pandemic, the IRS temporarily suspended the mailing of automated reminders to pay overdue tax bills starting in February 2022. The IRS will be providing about $1 billion in penalty relief. WASHINGTON - In a major step to help people who owe back taxes, the Internal Revenue Service today announced new penalty relief for approximately 4.7 million individuals, businesses and tax-exempt organizations that were not sent automated collection reminder notices during the pandemic.
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