Taxpayers who are late filing their 2020 and 2021 returns might be able to benefit from automatic penalty abatements.
In a recently released publication, the IRS details the requirements needed to qualify for this abatement. This penalty relief applies to some individuals, businesses and non-profit organizations.
The reason for this unusual IRS decision is the fact that payment due notices were suspended during the pandemic. Since this may have caused taxpayers to forget their tax obligation, this relief is being granted.
Who is affected?
Taxpayer filing forms 1040, 1041, 1120 series and 990-T. This means many individuals and businesses, as well as non-profit organizations. It applies to filers who were in IRS collection notice process, or were issued an initial balance due notice between February 5, 2022 and December 7, 2023, but did not received automated collections reminder notices during the pandemic
What is included?
Failure to pay penalties on taxes of less than $100,000.
What actions need to be taken?
You must pay your balance in full and file your return. No other action is needed, the abatement will be automatic if you are eligible. The penalty amount will be sent to you as a refund, or applied to a balance due for a different year, if applicable.
If your address has changed, be sure to update it with the IRS to ensure your refund is sent to the correct place.
Filers who do not receive the automatic abatement can contact the IRS to check their eligibility.
When must I file?
Regular penalties are expected to resume on April 1, 2024. Affected taxpayers are urged to file their returns and pay taxes due as soon as possible to take advantage of this opportunity.
