IRS Waives $1 Billion in Penalties for Pandemic-Era Tax Bills
The Internal Revenue Service (IRS) has announced a major one-time penalty relief programme, automatically waiving nearly $1 billion in penalties for about 4.7 million taxpayers, businesses, and organisations. The move aims to help those who fell behind on taxes during the pandemic and did not receive standard collection reminders.
Key Details of the Penalty Relief
- Who is eligible: About 4.7 million individuals, businesses, trusts, estates, and tax-exempt organisations.
- Amount: Nearly $1 billion in failure-to-pay penalties waived.
- Income: Most beneficiaries earn under $400,000 annually.
- Tax Years: Relief applies to returns for 2020 and 2021.
- Threshold: Assessed tax must be under $100,000.
- Automatic Process: No action required; refunds or credits will be issued automatically.
Official Statement from the IRS
“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. The IRS should be looking out for taxpayers, and this penalty relief is a common-sense approach to help people in this situation,” said IRS Commissioner Danny Werfel.
“We are taking other steps to help taxpayers with past-due bills, and we have options to help people struggling to pay,” he added.
Eligibility and Scope
To qualify, taxpayers must have filed specific forms (Form 1040, 1041, 1120 series, or Form 990-T) for 2020 or 2021. They must have been in the IRS collection process or received an initial balance due notice between February 5, 2022, and December 7, 2023.
The IRS will also release related tax liens if the lien was solely due to the unpaid bill covered by this relief.
What Happens Next
The failure-to-pay penalty will resume for eligible accounts from April 1, 2024. The IRS emphasises this is a one-time adjustment.
“The IRS is working hard to support taxpayers in every way possible. This new penalty relief for taxpayers is another way the agency is supporting people during this unprecedented period. This penalty relief will be automatic for eligible taxpayers; there’s no need to call,” Werfel said.
How to Check Your Status
Taxpayers can view their account balance and explore payment options, including installment agreements, online at IRS.gov/account.
