The IRS mentioned Tuesday it will waive penalty charges for individuals who didn’t pay again taxes that complete lower than $100,000 per 12 months for tax years 2020 and 2021.
Practically 5 million individuals, companies and tax-exempt organizations — most making beneath $400,000 per 12 months — can be eligible for the reduction beginning this week, which totals about $1 billion, the company mentioned.
The IRS quickly suspended mailing automated reminders to pay overdue tax payments in the course of the pandemic, starting in February 2022, and company management says the pause in automated reminders is a purpose behind the choice to forgive the failure-to-pay penalties.
“Due to the unprecedented effects of the COVID-19 pandemic, these reminders would have normally been issued as a follow up after the initial notice,” the IRS mentioned in a press release.
“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.”
Whereas the IRS plans to renew sending out regular assortment notices, the Tuesday announcement is supposed as one-time reduction based mostly on the unprecedented interruption attributable to the pandemic, IRS officers mentioned.
“It was an extraordinary time and the IRS had to take extraordinary steps,” IRS Commissioner Daniel Werfel advised reporters. He mentioned the change can be computerized for a lot of taxpayers and won’t require extra motion.
Taxpayers are eligible for computerized reduction in the event that they filed a Type 1040, 1041, 1120 collection or Type 990-T tax return for years 2020 or 2021, owe lower than $100,000 per 12 months in again taxes, and obtained an preliminary balance-due discover between Feb. 5, 2022 and Dec. 7, 2023.
If individuals paid the failure-to-pay penalty, they are going to get a refund, Werfel mentioned on a name with reporters. “People need to know the IRS is on their side,” he mentioned.
