December 21, 2023
No the IRS is not forgiving taxes.
Come on
But the IRS is giving a nearly $1 billion dollar holiday gift in the form of tax penalty relief to nearly 5 million Americans who owe back taxes.
The IRS just announced 5 million tax returns — filed by 4.7 million individuals, businesses, trusts, estates and tax-exempt organizations who owe back taxes for tax years 2020 and 2021 will be eligible for this one-time late payment penalty relief.
So why is the IRS doing this? Well the IRS is basically saying – our bad – because of pandemic related issues – we temporarily stopped mailing out the automated reminder letters letting taxpayers know they had these overdue tax bills. But the thing is — just because the letters stopped didn’t mean the interest and the penalty accrual stopped. So these taxpayers were unaware of the huge bill they were sitting on.
Now you’re probably wondering who will get this one-time relief. According to the IRS it will apply to taxpayers who owed less than $100,000 in taxes for the 2020 or 2021 taxable year and received an initial outstanding balance due notice between February 5, 2022 and December 7, 2023 for tax year 2020 or 2021.
This penalty relief is automatic. Eligible taxpayers do not need to take any action to get it. And – if you already paid these penalties for the 2020 or 2021 taxable year –you will get a refund or credit on your IRS account towards another outstanding tax bill.
You are going to get a special reminder letter that you owe back taxes. That letter will tell you exactly how much you owe, how you can pay the bill and the amount of penalty relief you’re going to get –if you qualify. The IRS says the average penalty relief will be about $206 per tax return. They’re going to start rolling out these penalty relief notices for individual taxpayers and then follow with business accounts in late December to early January then trusts, estates and tax-exempt organizations in late February to early March.
If you don’t pay your back taxes by April 1, 2024, the failure to pay penalty will start right back up again. Read more from the IRS here.
Here’s more from the IRS about the tax penalty relief.
