The Internal Revenue Service (IRS) is helping out consumers who may owe back taxes from the COVID-19 pandemic.
The agency announced it will waive penalty fees for those with unpaid tax bills from the 2020 and 2021 filing years. In the announcement, the IRS took the blame, citing its own issues with sending out follow-up correspondence to taxpayers, reminding them of their payments during the COVID-19 pandemic.
As a result, nearly five million consumers and businesses will receive penalty relief, totaling nearly $1 billion in savings, or $206 per return.
“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,” said IRS Commissioner Danny Warfel. “The IRS should be looking out for taxpayers, and this penalty relief is a common-sense approach to help people in this situation.”
How does it work?
There are a few criteria to be eligible for the penalty fee relief, including:
Having a total tax bill under $100,000
Received an initial balance due notice between February 5, 2022, and December 7, 2023
Received an initial collection notice from the IRS
Income under $400,000
No action is required on the part of taxpayers to receive the penalty fee waiver. The IRS will update taxpayers’ individual accounts with the late fees removed.
Taxpayers who already paid their late fees for 2020 or 2021 are also eligible to receive credits from the IRS. No action is required here either – taxpayers’ accounts will be credited the penalty fees.
All taxpayers who are eligible for the fee waiver should expect to see their refunds starting in January 2024. However, taxpayers should keep an eye on it, as it may not come through until the early months of 2024.
Waivers run out April 2024
Penalty fees related to back taxes aren’t going to last forever. The IRS plans to reinstate these added fees on April 1, 2024.
Collection notices are set to return next year, as well. Starting in January, the IRS will once again send out initial notices and follow-up notices to all individuals and businesses with back taxes from before the 2022 tax year.
For those who owe back taxes and are struggling to make payments, the IRS has several payment options, including payment plans, available for taxpayers to stay on top of their balances moving forward.
Photo Credit: Consumer Affairs News Department Images
Posted: 2023-12-21 13:10:12
