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The agency is extending the reprieve for the 2021 and 2022 tax years to roughly 4.7 million individuals, businesses, trusts and tax-exempt organizations
Getting a letter from the IRS saying you’re past due on a tax debt can be frightening. That fear often drives people to tax settlement companies that offer hope of significant debt reduction.
IRS Commissioner Danny Werfel says don’t believe the hype. That’s especially good advice now, given a recent action by the agency.
In 2022, short-staffed and struggling to dig out of an enormous pandemic-related backlog, the IRS temporarily suspended the mailing of automated reminders to taxpayers about overdue tax bills for 2020 and 2021. The invoices would have normally been issued after an initial balance-due notice was issued.
With many pandemic issues behind it and staffing up thanks to the Inflation Reduction Act’s boost to the agency’s budget, the IRS announced it will resume mailing collection notices for the 2021 and 2022 tax years in January.
The notices may shock folks who haven’t received an IRS bill for over a year, Werfel said. For individual taxpayers, the median amount owed is $6,751, according to the agency.
“Given that penalties and interest continued to accrue under law, the bill amounts for those who weren’t paying will be larger than the last time they received a letter from the IRS,” Werfel said. “For these affected taxpayers, we know this is a tough situation.”
So, showing a softer side, the IRS has decided to waive the failure-to-pay penalties for about 4.7 million individuals, businesses, trusts and tax-exempt organizations that didn’t get automated reminders of their debts.
But Werfel also issued a caution: “People with unpaid tax bills also need to be wary about aggressive marketing by some places that overinflate promises of wiping out IRS debt,” he said.
There are unscrupulous tax debt settlement companies and scammers who will no doubt try to take advantage of this relief. They may use it as a hook to con you or get you to sign up for an expensive service you don’t need.
“We have seen patterns of behavior in the past where marketers and promoters exploit an opportunity like this,” Werfel said.
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Comments
https://www.irs.gov/newsroom/irs-helps-taxpayers-by-providing-penalty-relief-on-nearly-5-million-2020-and-2021-tax-returns-restart-of-collection-notices-in-2024-marks-end-of-pandemic-related-pause
The IRS can process and send us a claim as long as the statute of limitation is open. After the statute of limitation expires, they are SOL (i.e., out of luck). We we can not compel them to act before that time.
Based on the Notice, you will not be charged penalties but interest will be charged. I had underpaid estimated taxes but calculated and included the interest charge when I filed. I did not include penalty for the underpayment and let the IRS send me a notice if they wanted to assess the penalty.