IRS waives nearly $1 billion in back tax penalties

by ian

The IRS is waiving nearly $1 billion in back tax penalties stemming from the pandemic years.

The one-time forgiveness applies to those who owe less than $100,000 for tax years 2020 and 2021. It’s estimated to affect 5 million people with an average of $206 per return.

In February 2022, the IRS paused mailing automated reminders on overdue tax bills but these accounts continued to accrue failure-to-pay penalties. Leadership says the decision was made out of concern for taxpayers suddenly getting a larger tax bill. Those who would have been eligible for forgiveness but already paid the penalties will get a refund.

Commissioner Danny Werfel says, “This penalty relief is a common-sense approach to help people in this situation.” The IRS will resume mailing collection notices in January.