The Internal Revenue Service (IRS) has granted a waiver on failure-to-pay penalties for eligible taxpayers impacted by the pause in collection notices during 2020 and 2021.
This penalty relief is expected to benefit nearly 5 million taxpayers, providing an estimated $1 billion in tax relief.
In response to the COVID-19 pandemic, the IRS temporarily halted the issuance of automated reminders for overdue tax bills.
These reminders, typically sent as a follow-up to the initial notice, were suspended during this period.
It is important to note that despite the suspension of reminder notices, the failure-to-pay penalty continued to accumulate for taxpayers who did not make full payments in response to the initial balance-due notice.
IRS: Penalty Relief for Individuals Below $100K
The IRS intends to implement adjustments progressively across individual, business, trust, estate, and tax-exempt organization accounts.
The primary focus of this penalty relief is on individuals earning under $100,000 annually.
The IRS has already made adjustments to eligible individual accounts, with subsequent adjustments scheduled for business accounts in late December to early January.
Adjustments for trusts, estates, and tax-exempt organizations are slated for late February to early March 2024.
For eligible taxpayers, the relief is automatic, requiring no further action.
Those who qualify for relief but have already settled their balance will receive a refund or credit payments applied to outstanding tax liabilities.
The failure-to-pay penalty is set to resume on April 1, 2024, for eligible taxpayers.
IRS Launches 2024 Tax Season on January 29
The IRS announced that the 2024 tax season will commence on Monday, January 29, marking the beginning of the acceptance and processing of 2023 tax returns.
The general deadline for most taxpayers to file their personal federal tax return, settle any owed tax, or request an extension is Monday, April 15, 2024.
Taxpayers residing in Maine and Massachusetts have until April 17 to file their taxes due to the Patriot’s Day and Emancipation Day holidays in those states.
Individuals in federally declared disaster areas may also have extended filing deadlines.
The IRS anticipates receiving over 128.7 million individual tax returns by the April 15, 2024, deadline. Most taxpayers typically receive their refunds within 21 days, with many refunds available by February 27.