The IRS recently announced welcome news for many taxpayers in the form of expanded penalty relief as well as an end to the pause on sending collection notices. According to an IRS news release, nearly 5 million Americans will benefit from the agency’s decision to provide penalty relief on 2020 and 2021 tax returns. This relief applies to a variety of penalties, including failure-to-file and failure-to-pay additions to tax.
At the same time, the IRS announced it will resume sending collection notices in 2024. This collection pause has been in effect since the start of the COVID-19 pandemic in early 2020. While the pause was intended to provide financial relief during difficult economic times, the IRS has determined that conditions have improved enough to restart collection efforts by 2024 at the latest.
Who Qualifies for Penalty Relief?
The penalty relief announced by the IRS will be automatically applied to eligible taxpayers. This means that if you qualify, you do not need to request or apply for the relief. The nearly 5 million returns receiving relief include those with certain penalties for reasonable cause. Taxpayers qualifying for relief will receive letters from the IRS confirming that the relief has been provided.
The vast majority of the penalty relief is going to eligible taxpayers with assessed tax under $100,000. The IRS effort focuses on helping working families struggling financially during the pandemic.
What About IRS Collection Notices?
For taxpayers with outstanding tax debts, the news is less positive. While collection efforts have been on hold, the IRS plans to restart sending notices by 2024 at the latest. These notices can include collection notices for back taxes owed, as well as potential levies on wages or bank accounts.
However, the good news is that you still have time to address tax debts before the collection pause ends. The IRS encourages using programs like installment agreements and offers in compromise to settle up in affordable ways. Consulting with a tax professional can help you understand all your options.
The Bottom Line
Between penalty relief for millions of taxpayers and the impending restart of collection efforts, the recent IRS announcement contains positive and negative news, depending on your situation. If you think you may qualify for penalty relief or want to proactively address any outstanding tax debts before collections resume, it is important to act quickly while these programs are available to help. Reaching out to the IRS or a qualified tax expert makes sense to ensure you take advantage of potential relief programs.
The key is not waiting to address any issues flagged by the IRS. With the end of the collections pause coming in 2024, you have a window to work with the IRS and get penalties removed or tax debts reduced. Don’t delay in contacting the IRS to resolve your situation on the most favorable terms possible.
The Final Words
There are numerous tax relief options that are put forth by the government, but individuals and business owners should seek an experienced tax relief specialist who can strategize, take full advantage, and save considerable sums of money for taxpayers’ benefit and interest.
Ace Plus Tax Resolution provides the best eligible solutions to taxpayers with the IRS and state tax problems. James Cha is a CPA and Certified Tax Resolution Specialist® who has been representing his clients and dealing with the IRS for about 35 years. His practice is in Los Angeles, but his clients are all across the nation.
Contact him at (213) 600-7388 or James@AcePlusTaxResolution.com for a free consultation.