Penalty relief is being offering to about 4.7 million individuals, businesses and tax-exempt organizations, the Internal Revenue Service said last month. The penalty relief only applies to eligible taxpayers with assessed tax liabilities under $100,000.Those affected were not sent automated collection reminder notices during the pandemic, with most making less than $400,000 annually. Although reminder notices were suspended starting in February 2022 failure-to-pay penalty continued to accrue for taxpayers who failed to pay taxes due in full after an initial notice.
The IRS is taking several steps before it resumes normal collection notices for tax years 2020 and 2021. This includes sending special reminders this month. Taxpayers will be notified of the amount they owe, ways to pay and amount of any penalty relief.
The IRS has adjusted eligible individual accounts and planned to follow with adjustments to business accounts last month and this month and then then trusts, estates and tax-exempt organizations in late February to early March.
Taxpayers not eligible for automatic relief can utilize existing penalty relief procedures, such as applying for relief under the reasonable cause criteria or the First-Time Abate program.
