In a recent announcement, the Internal Revenue Service (IRS) has unveiled a significant relief measure aimed at helping individuals, businesses, and tax-exempt organizations who were not sent automated collection reminder notices during the COVID-19 pandemic. This much-needed relief comes in response to the unique challenges posed by the pandemic.
The Impact of COVID-19
Due to the pandemic, the IRS suspended automated reminder notices for overdue taxes starting in February 2022. However, the failure-to-pay penalty still applied to those who didn’t fully pay their bills after the initial notice.
Key Highlights of the IRS Penalty Relief Initiative:
- Approximately 4.7 Million Beneficiaries: This relief initiative is expected to benefit a significant number of taxpayers who did not receive automated collection reminder notices during the pandemic.
- $1 Billion in Relief: The IRS has allocated a substantial amount, around $1 billion, to provide relief from penalties incurred due to the lack of reminder notices.
- Income Threshold: Most of those receiving this penalty relief are individuals and entities with an annual income of less than $400,000.
What to Expect Next
The IRS will gradually resume normal collection procedures for tax years 2020 and 2021. Affected taxpayers can expect to receive appropriate notifications and guidance.
The IRS’s pandemic-related penalty relief offers significant assistance to millions of individuals and entities affected by the pandemic’s financial challenges. As the IRS continues to address these unique circumstances, taxpayers can anticipate a more lenient approach to overdue tax bills.
For more information and tax guidance you can reach Martin D. Hauptman at (973) 243-7912 or mhauptman@mblawfirm.com.