IRS on the Prowl for Overdue Taxes, Offers Relief to Struggling Payers
Originally, the IRS declared they'd be targeting more than 4.7 million individuals, businesses, and tax-exempt organizations, the vast majority of which earned less than $400,000 annually. These individuals, who had not received a second tax notice, would benefit from easing penalties for non-payment.
"While we're ramping up regular collection letters, we're concerned about taxpayers who suddenly receive larger tax bills without any prior communication from us," said IRS Commissioner Danny Wayfair. "The IRS should be concerned for these taxpayers, and this penalty relief is a great help. A way to assist those in need, an empathetic approach for those in such situations."
"We're taking additional steps to aid taxpayers with past-due amounts and have other avenues to help those who face payment challenges," added Wayfair. "Those eligible for penalty relief needn't take any action—the IRS will automatically apply it."
The IRS estimates the relief would total around $1 billion or $206 per applicant. However, only taxpayers with balances under $100,000 qualify, and it applies only to 2020 and 2021 tax years. If you have already paid your taxes for 2020 and 2021, you might be entitled to an automatic discount. The IRS plans to reimburse or credit the amount towards your balance.
Commencing in January, the IRS will send out special reminder letters to affected individuals before issuing tax forms. "This letter will serve as a reminder of taxpayer obligations, payment options, and potentially the equipped amount of penalty relief," said Wayfair. "Taxpayers unable to pay their entire outstanding balance are urged to visit IRS.gov/payments and address their delinquent balances."
Taxpayers should act promptly to resolve their overdue tax debts, as relief penalties for non-payment will resume in April 2024. Keep in mind that while the relief applies to assessment penalties, it does not cover interest on unpaid taxes.
Additional Resources:
Penalty Relief Opportunities
To qualify for IRS penalty relief, United States taxpayers should consider applying for one of two options:
- Penalty Relief for Tax Years 2020 and 2021:
- If your total tax liability for both tax years is below $100,000, you might be eligible for IRS penalty relief. Check with a tax professional to confirm your eligibility.
- Offer in Compromise (OIC):
- Taxpayers frequently unable to pay their tax debt may request an OIC, where the IRS will accept a lower payment amount, contingent upon meeting specific criteria. Consult a tax expert to judge your eligibility.
