IRS Waives $1 Billion in Penalties for Qualifying Taxpayers Due to Pandemic Disruptions

Taxpayers affected by pandemic disruptions will receive $1 billion in penalty charge waivers from the IRS. Individuals who owed less than $100,000 in taxes for 2020 and 2021 are eligible for this reduction. The tax agency waived fees due to operational issues and a backlog of processing tax returns.

Tax Brackets

Automatic Penalty Reduction for Eligible Taxpayers

The IRS suspended notices to people who owing money, but penalties continued to accumulate for those in arrears. IRS officials said this reprieve is a one-time step to acknowledge the pandemic’s unusual conditions. Regular collection notices will resume.

IRS Commissioner Daniel Werfel stressed that many eligible taxpayers will automatically be affected by the change. For 2020 or 2021, taxpayers must have filed Form 1040, 1041, 1120 series, or 990-T to receive automatic penalty reduction.

They must also owe less than $100,000 in past taxes and have received a balance-due notice between Feb. 5, 2022, and Dec. 7, 2023.

READ ALSO: IRS to waive $1 billion in penalties for millions of taxpayers. Here’s who qualifies.

IRS Assures Refunds for Penalty Payers; Relief Benefits 5 Million Taxpayers

Werfel told reporters that failure-to-pay penalty payers would be refunded. He stressed, “People need to know the IRS is on their side.”

The IRS expects 5 million people, corporations, and tax-exempt organizations to gain from the relief, mostly those earning under $400,000. This project intends to reduce taxpayers’ financial burden and correct inadvertent penalties caused by the IRS’s pandemic operations.

READ ALSO: IRS helps taxpayers by providing penalty relief on nearly 5 million 2020 and 2021 tax returns; restart of collection notices in 2024 marks end of pandemic-related pause