The IRS unveiled plans to waive penalties for individuals and entities owing less than $100,000 per year in back taxes for 2020 or 2021, offering relief to nearly 5 million eligible taxpayers and businesses, most earning under $400,000 annually.
Unprecedented Relief for Taxpayers
The IRS is set to provide extensive relief by waiving penalties for back taxes, reaching approximately $1 billion for eligible taxpayers, businesses, and tax-exempt groups.
The relief targets those owing under $100,000 per year for the tax years 2020 and 2021, aiming to alleviate financial burdens exacerbated by the pandemic’s impact.
The agency temporarily halted automated reminders for overdue tax payments during the pandemic, intending to address the failure-to-pay penalties. Despite the suspension of reminders, the penalty accrued for taxpayers not fully settling their dues prompted the decision to waive these penalties.
Streamlined Relief Process
While the IRS plans to reinstate standard collection notices, the recent announcement seeks to offer a one-time reprieve, attributed to the pandemic’s unforeseen disruption. Commissioner Daniel Werfel assured taxpayers that the relief would automatically apply to many eligible filers, requiring no further action.
Eligible taxpayers must have filed specific tax forms for the mentioned years, owed less than $100,000 yearly in back taxes, and received initial balance-due notices between February 5, 2022, and December 7, 2023.