Yesterday, the IRS announced new tax penalty relief that could be a welcome holiday surprise for many Americans with overdue tax bills.  The IRS will waive failure to pay penalties for individuals and businesses who owe less than $100,000 in taxes from 2020 or 2021, as long as they pay their balance due before April 1, 2024.

During the COVID pandemic, the IRS stopped sending out automatic notices reminding taxpayers of their balance due.  So, many taxpayers may not have realized that their unpaid balances continued accruing interest and penalties over the last few years.  The IRS will send special notices in January to eligible taxpayers with their updated balance and payment instructions.  Automatic notices will also resume in the new year.

The penalty waiver will be applied automatically, so eligible taxpayers don’t have to take any extra steps to seek this relief.  Individuals who already paid penalties for tax years 2020 and 2021 will get a credit or refund.

While the IRS is required by law to collect interest on unpaid tax balances, waiving the failure to pay penalty will help reduce the total amount due from taxpayers and will provide an incentive to settle their accounts quickly.  Individuals who are unable to pay their tax debt in full can often negotiate a payment plan with the IRS or an offer in compromise, whereby the IRS agrees to settle the tax debt for less than the full amount owed based on the individual’s unique circumstances and financial position.

An experienced tax attorney can be your best weapon in seeking relief from back taxes.  If you have questions about your tax situation or this new penalty waiver, contact Best Law Offices for a free consultation with one of our experts.  And don’t wait – the window for penalty relief will only stay open through March 31, 2024!