IRS Covid era Tax Penalty" width="2500" height="1668" />Waivers will be automatically applied, meaning taxpayers who qualify will not have to take any action on their own to benefit from the relief.
IRS Covid era Tax Penalty" width="2500" height="1668" />
The Internal Revenue Service announced Tuesday that some tax filers who faced late-pay penalties for tax years 2020 and 2021 will have those penalties waived.
The waiver will apply to filers with assessed tax bills of less than $100,000 and who were in the IRS collection notice process, or were issued an initial balance due notice between Feb. 5, 2022, and Dec. 7, 2023.
The waivers will be automatically applied, meaning those who qualify will not have to take any action on their own to benefit from the relief.
The IRS said its decision to grant the waiver is due to the agency having suspended late payment reminders in February 2022 because of the pandemic. Taxpayers who owed money for the 2020 and 2021 tax years would have received an initial notice of their bill, but no follow-up reminder. Even though no follow-up collection notice was sent, the tax penalty continued accruing, the IRS said.
The agency plans to start sending out special reminder letters in January 2024 to alert filers of their current liabilities, ways to pay and the amount of penalty relief, if applied.
"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 an agency release.
"The IRS should be looking out for taxpayers, and this penalty relief is a common-sense approach to help people in this situation."
The agency estimates 4.7 million individuals, businesses, trusts, estates and tax-exempt organizations are eligible for the penalty relief, representing $1 billion in savings to taxpayers, or about $206 per return.
Rob Wile is a Pulitzer Prize-winning journalist covering breaking business stories for NBCNews.com.
