IRS Gives Overdue Taxpayers a Break - If You Act Soon
In a recent Wall Street Journal article dated December 19, 2023, the IRS is reported to be waiving nearly $1 billion in late-payment penalties for about 4.6 million taxpayers for the years 2020 and 2021. This relief is due to the IRS halting collection letters during the pandemic, leaving many taxpayers unaware of their growing debt.
According to the article, “the long absence of these computer-generated letters had big consequences for taxpayers. Americans’ debt on unpaid back taxes had been growing with interest and penalties, and many were likely in the dark about just how much they owed.”
“We have been concerned about taxpayers who haven’t heard from us in a while suddenly getting a larger tax bill,” said IRS Commissioner Danny Werfel.
Recent Factors for Increased Overdue Taxes
As of Dec 31, 2022, 18.6 million individual taxpayers had accumulated $316 billion in overdue taxes. This is an increase of about 16.8 million dollars owed in September 2019.
One of the larger contributing factors to the increase in overdue taxes amount is the expiration of the pandemic tax credits for children and dependent care.
Normally, the fact that a taxpayer didn’t get a notice of overdue taxes and penalties wouldn’t be a reason for penalty relief. So, this is an unusual opportunity for overdue taxpayers.
Taxpayers owing less than $100,000 and who received notices by Dec. 7, 2023, are eligible, with the waiver expiring on April 1, 2024. Refunds or credits will be issued for already paid penalties. The IRS will resume automated notices for prior year debts starting in January, 2024.
If you get a notice of overdue taxes, don’t ignore them. Contact your accountant or a tax professional for help in how to take advantage of this unique opportunity.
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