Almost 5 million taxpayers who’ve unpaid tax payments from 2020 and 2021 could have virtually $1 billion in penalty charges waived by the Inner Income Service (IRS).
The IRS introduced penalty reduction in December for taxpayers who had excellent tax payments however weren’t despatched automated assortment reminder notices through the pandemic. Although the notices didn’t exit in 2020 and 2021, the failure-to-pay penalty accrued for taxpayers who didn’t totally pay their payments.
“Because the IRS has been getting ready to return to regular assortment mailings, we now have been involved about taxpayers who have not heard from us shortly instantly getting a bigger tax invoice. The IRS needs to be looking for taxpayers, and this penalty reduction is a common sense strategy to assist folks on this scenario,” IRS Commissioner Danny Werfel mentioned in a press release. “We’re taking different steps to assist taxpayers with past-due payments, and we now have choices to assist folks struggling to pay.”
The mailed IRS notices, which ought to begin hitting mailboxes this month, define the quantity of penalty reduction acquired. Taxpayers also can verify IRS.gov to entry their tax transcripts and data.
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What to know concerning the failure-to-pay waiver provision
The penalty reduction is automated for taxpayers who owe again taxes, although it’s restricted to tax payments of $100,000 or much less, Rob Seltzer, a licensed public accountant (CPA) at Seltzer Enterprise Administration, instructed Yahoo Finance.
“If a taxpayer already paid the penalty earlier than the reduction was introduced, they may mechanically be refunded,” he added.
If the taxpayer shouldn’t be eligible for this reduction, the IRS recommends making use of for reduction beneath the First-Time Abate program.
One other factor impacted taxpayers want to contemplate is curiosity, which the IRS didn’t waive.
“Whereas penalties might be the bigger quantity, there’ll nonetheless be curiosity due on the excellent steadiness till paid in full,” Janet Lee Krochman, a licensed public accountant (CPA), instructed Yahoo Finance.
Taxpayers ought to speak to their tax skilled if they’ve questions on the penalty waiver or curiosity.
Taxpayers must also pay attention to scammers pretending to be the IRS.
“The IRS can be sending letters, not emails or texts, and the IRS is not going to ask for fee by way of reward playing cards,” Lawrence Pon, a CPA at Pon & Associates, instructed Yahoo Finance. “Any funds to the IRS might be made by verify to the tackle on the letter or might be paid electronically to the IRS out of your checking account or utilizing a credit score or debit card.”
Ronda is a private finance senior reporter for Yahoo Finance and legal professional with expertise in regulation, insurance coverage, training, and authorities. Observe her on X @writesronda
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