IRS to waive $1 billion in penalties for individuals and corporations owing again taxes for 2020 or 2021

WASHINGTON (AP) — The IRS mentioned Tuesday it’ll waive penalty charges for individuals who did not pay again taxes that whole lower than $100,000 per yr for tax years 2020 and 2021.

Practically 5 million individuals, companies and tax-exempt organizations — most making below $400,000 per yr — will probably be eligible for the reduction beginning this week, which totals about $1 billion, the company mentioned.

The IRS briefly suspended mailing automated reminders to pay overdue tax payments in the course of the pandemic, starting in February 2022, and company management says the pause in automated reminders is a cause behind the choice to forgive the failure-to-pay penalties.

“As a result of unprecedented results of the COVID-19 pandemic, these reminders would have usually been issued as a observe up after the preliminary discover,” the IRS mentioned in an announcement.

“Though these reminder notices had been suspended, the failure-to-pay penalty continues to accrue for taxpayers who didn’t totally pay their payments in response to the preliminary steadiness due discover.”

Whereas the IRS plans to renew sending out regular assortment notices, the Tuesday announcement is supposed as one-time reduction primarily based on the unprecedented interruption attributable to the pandemic, IRS officers mentioned.

“It was a rare time and the IRS needed to take extraordinary steps,” IRS Commissioner Daniel Werfel instructed reporters. He mentioned the change will probably be automated for a lot of taxpayers and won’t require extra motion.

Taxpayers are eligible for automated reduction in the event that they filed a Type 1040, 1041, 1120 collection or Type 990-T tax return for years 2020 or 2021, owe lower than $100,000 per yr in again taxes, and obtained an preliminary balance-due discover between Feb. 5, 2022 and Dec. 7, 2023.

If individuals paid the failure-to-pay penalty, they are going to get a refund, Werfel mentioned on a name with reporters. “Individuals must know the IRS is on their aspect,” he mentioned.