IRS to waive nearly $1 billion in late-payment penalties
(The Center Square) – Americans who owe back taxes have a new reason to pay up after the Internal Revenue Service said it would waive nearly $1 billion in late-payment penalties.
The IRS announced new penalty relief for about 4.7 million individuals, businesses and tax-exempt organizations that were not sent automated collection reminder notices during the pandemic.
The IRS will give about $1 billion in penalty relief. Most of those receiving the penalty relief make less than $400,000 a year, the tax collection agency said.
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"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," IRS Commissioner Danny Werfel said in a statement. "The IRS should be looking out for taxpayers, and this penalty relief is a common-sense approach to help people in this situation. We are taking other steps to help taxpayers with past-due bills, and we have options to help people struggling to pay."
During the pandemic, the IRS temporarily stopped mailing automated reminders to pay overdue tax bills starting in February 2022. The reminders would have normally been issued as a follow up after the initial notice. Although these reminder notices were suspended, the failure-to-pay penalty continued to accrue for taxpayers who did not fully pay their bills in response to the initial balance due notice.
"Given this unusual situation, the IRS is taking several steps in advance of resuming normal collection notices for tax years 2020 and 2021 to help taxpayers with unpaid tax bills, including some people who have not received a notice from the IRS in more than a year," the agency said.
This penalty relief is automatic. Eligible taxpayers don't need to take any action to get it. 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 2020 and 2021 tax years, the IRS will issue a refund or credit the payment toward another outstanding tax liability.
