The IRS will waive penalty fees for individuals and businesses who owe back taxes totaling less than $100,000 for tax years 2020 and 2021.
Driving the news: Approximately 5 million people, businesses, and tax-exempt organizations, mostly earning under $400,000 per year, will be eligible for the relief, amounting to approximately $1 billion.
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- The IRS suspended mailing automated reminders to pay overdue tax bills during the pandemic, which influenced the decision to forgive the failure-to-pay penalties.
- The decision is a one-time relief based on the interruption caused by the pandemic and the unprecedented effects of COVID-19.
- The IRS plans to resume sending out normal collection notices in the future.
The big picture: Taxpayers who meet certain criteria, including filing specific tax forms and receiving an initial balance-due notice between February 5, 2022, and December 7, 2023, will be eligible for automatic relief.
- Taxpayers who have already paid the failure-to-pay penalty will receive a refund.
What they’re saying: “It was an extraordinary time and the IRS had to take extraordinary steps,” IRS Commissioner Daniel Werfel told reporters.
