The IRS mentioned Tuesday it will waive penalty charges for individuals who didn’t pay again taxes that complete lower than $100,000 per yr for tax years 2020 and 2021.
Practically 5 million individuals, companies and tax-exempt organizations — most making underneath $400,000 per yr — will likely 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 throughout the pandemic, starting in February 2022, and company management says the pause in automated reminders is a motive behind the choice to forgive the failure-to-pay penalties.
“Because of the unprecedented results of the COVID-19 pandemic, these reminders would have usually been issued as a observe up after the preliminary discover,” the IRS mentioned in an announcement.
“Though these reminder notices have been suspended, the failure-to-pay penalty continues to accrue for taxpayers who didn’t totally pay their payments in response to the preliminary steadiness due discover.”
Whereas the IRS plans to renew sending out regular assortment notices, the Tuesday announcement is supposed as one-time reduction primarily based on the unprecedented interruption brought on by the pandemic, IRS officers mentioned.
“It was a rare time and the IRS needed to take extraordinary steps,” IRS Commissioner Daniel Werfel advised reporters. He mentioned the change will likely be computerized for a lot of taxpayers and won’t require further motion.
Taxpayers are eligible for computerized reduction in the event that they filed a Type 1040, 1041, 1120 sequence or Type 990-T tax return for years 2020 or 2021, owe lower than $100,000 per yr in again taxes, and acquired an preliminary balance-due discover between Feb. 5, 2022 and Dec. 7, 2023.
If individuals paid the failure-to-pay penalty, they’ll get a refund, Werfel mentioned on a name with reporters. “Folks must know the IRS is on their aspect,” he mentioned.
