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Approximately 5 million taxpayers who are behind on their 2020 and 2021 taxes will have approximately $1 billion in penalties waived by the Internal Revenue Service (IRS).
In December, the IRS announced reduced penalties for taxpayers who had unpaid taxes during the pandemic but were not sent automatic collection reminders. In 2020 and 2021, no notices were issued, but non-payment penalties were imposed on taxpayers who did not pay their bills in full.
“As the IRS prepares to revert to regular collection mail, we were concerned that taxpayers who had not heard from them in a while would suddenly be charged a large amount of tax.The IRS should look out for taxpayers. “And this reduced penalty is a common sense approach to helping people in this situation,” IRS Commissioner Danny Wuerffel said in a statement. “We are taking other steps to assist taxpayers who have missed their due payments, and we also have options available to assist those who are struggling to make their payments.”
The mailed IRS notices, which should start arriving in your mailbox this month, will outline the amount of penalty reduction you received. Taxpayers can also check their IRS.gov to access their tax records and records.
Complete coverage: 2024 Taxes — Everything You Need to File Your Taxes on Time
What you need to know about unpaid forgiveness clauses
Rob Seltzer, a certified public accountant (CPA) with Seltzer Business Management, said penalty relief is automatic for taxpayers who don’t pay their taxes, but only for those who owe less than $100,000. limited, said Rob Seltzer, a certified public accountant (CPA) with Seltzer Business Management.
“If a taxpayer had already paid a penalty before the relief was announced, it will be automatically refunded,” he added.
If a taxpayer is not eligible for this relief, the IRS recommends that they apply for relief under the Initial Relief Program.
Another thing that affected taxpayers need to consider is the interest that the IRS did not waive.
CPA Janet Lee Klockman told Yahoo Finance, “While the fine may be higher, the unpaid balance will continue to accrue interest until it is paid in full.” he said.
Taxpayers should consult a tax professional if they have questions about penalty relief or interest.
Taxpayers should also be wary of scammers impersonating the IRS.
“The IRS will be sending letters rather than emails or text messages, and the IRS will not require payment by gift card,” Lawrence Pon, a certified public accountant at Pon & Associates, told Yahoo Finance. “Payments to the IRS can be made by check made to the address on the letter, or you can pay the IRS electronically from your bank account or by using a credit or debit card.”
Rhonda is Yahoo Finance’s senior personal finance reporter and an attorney with experience in law, insurance, education, and government. Follow her on X @writesronda
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