For people who owe back taxes, the IRS has announced that it will be waiving the penalty fee for tax years 2020 and 2021.
The federal agency said that it is doing away with the fees, which amount to about $1 billion, because of the disruption caused by the COVID-19 pandemic.
The nationwide shutdown caused issues with the IRS’ operation and led to backlogs of unprocessed returns, The Associated Press reported.
The IRS never sent those owed money a notice, so their penalties continued to grow.
Taxpayers will get a letter next month from the IRS telling them about their liability and normal collection processes will begin.
“Due to the unprecedented effects of the COVID-19 pandemic, these reminders would have normally been issued as a follow up after the initial notice,” the IRS said.
The relief will be automatic as long as you qualify.
You will have to have filed a 1040, 1041, 1120 series, 990T form for 2020 or 2021 and owe less than $100,000 per year in back taxes.
You also would have received a balance due notice between Feb. 5, 2022, and Dec. 7, 2023.
About five million people, businesses and tax-exempt organizations qualify. If someone already paid the penalty, they will get a refund.
This is intended to be a one-time relief.