By Matthew R. Staul, EA, MBA
The IRS is automatically waiving failure-to-file penalties on unpaid taxes that were less than $100,000 for the years 2020 and 2021. On Feb. 9, 2022, the IRS announced that they temporarily suspended the mailing of notice letters for balances due. Penalties and interest continued to accrue in the accounts with balances due, and no correspondence was sent to the taxpayers informing them of the ongoing issues in their accounts. The IRS is offering this penalty relief to aid the taxpayers who are struggling to pay off their accounts for the specified years. You must meet the criteria under certain eligibility restrictions to qualify for this penalty relief.
An “Eligible Taxpayer” is any Taxpayer (IRS N-2024-07):
• Whose assessed income tax for the taxable year 2020 or 2021, as of Dec.7, 2023, is less than $100,000, excluding any applicable additions to tax, penalties or interest;
• Who was issued an initial balance due notice (including, but not limited to Notice CP14 or Notice CP161) on or before Dec. 7, 2023, for the taxable year 2020 or 2021; and
• Who is otherwise liable during the relief period for accruals of additions to tax for the failure to pay under § 6651(a)(2) or 6651(a)(3) with respect to an eligible return for the taxable year 2020 or 2021.
Relief Period and Exceptions (IRS N-2024-07)
The relief period granted in this notice begins on the date the IRS issued the initial balance due to the taxpayer, or Feb. 5, 2022, whichever is later, and ends on March 31, 2024. Taxpayers will still be liable for any addition to tax that accrued before and after the relief period. The taxpayers will also be responsible for interest accrued during this relief period. This relief is not eligible for penalties associated with fraudulent failure to file or failure to pay in an offer in compromise.
Matthew R. Staul is an enrolled agent with the Medical Management Consulting Group, Inc., a full-service consulting and accounting firm based in Virginia Beach. mmcgonline.com