IRS Grants Unprecedented Tax Amnesty: Millions Eligible For Penalty Waiver On Debts

Written By BlabberBuzz | Wednesday, 20 December 2023 04:30 PM
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The Internal Revenue Service (IRS) announced on Tuesday that it will be waiving penalty fees for individuals who have failed to pay back taxes totaling less than $100,000 per year for the tax years 2020 and 2021.

This relief will be available to nearly 5 million people, businesses, and tax-exempt organizations, with most of them earning under $400,000 per year. The total amount of relief is estimated to be around $1 billion, according to the agency.

The decision to forgive the failure-to-pay penalties is partly due to the temporary suspension of automated reminders to pay overdue tax bills during the COVID-19 pandemic, which began in February 2022. The IRS stated that these reminders would have typically been issued as a follow-up after the initial notice, but they were suspended due to the unprecedented effects of the pandemic.

Although the reminder notices were halted, the failure-to-pay penalty has continued to accrue for taxpayers who did not fully pay their bills in response to the initial balance due notice, the IRS explained in a statement.

While the IRS plans to resume sending out normal collection notices, this announcement serves as a one-time relief measure based on the exceptional disruption caused by the pandemic, according to IRS officials.

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IRS Commissioner Daniel Werfel emphasized that the change will be automatic for many taxpayers and will not require any additional action on their part. Taxpayers will be eligible for automatic relief if they filed a Form 1040, 1041, 1120 series, or Form 990-T tax return for the years 2020 or 2021, owe less than $100,000 per year in back taxes, and received an initial balance-due notice between February 5, 2022, and December 7, 2023.

Werfel also noted that individuals who have already paid the failure-to-pay penalty will receive a refund. "People need to know the IRS is on their side," he assured during a call with reporters.

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