IRS Announces $1 Billion in Tax Penalty Waivers For 2020 + 2021
tax penalty waiver


Are you among the nearly 5 million taxpayers with a delinquent tax bill from the 2020 or 2021 fiscal year? If so, here’s some good news you’ll appreciate: The IRS is waiving nearly $1 billion in penalty fees for unpaid tax bills from this time period.

Why is The IRS Waiving These Fees?

The tax penalty relief program, announced in late December last year, is aimed at taxpayers with outstanding tax bills who were not sent automated collection reminders amid the pandemic shakeup. The measure addresses the fact that even though notices were not issued in 2020 and 2021, failure-to-pay penalties accrued for taxpayers who did pay their bills in total during this time frame.

IRS Commissioner Danny Werfel summed it up in a recent formal statement: “As the IRS has been preparing to return to normal collection mailings, we have been concerned about taxpayers who haven’t heard from us in a while suddenly getting a larger tax bill. The IRS should be looking out for taxpayers, and this penalty relief is a common-sense approach to help people in this situation,” adding, “We are taking other steps to help taxpayers with past-due bills, and we have options to help people struggling to pay.”

The IRS recently started mailing notices outlining the penalty relief program to those who qualify. If you’re among the folks with outstanding penalties for payment delinquencies, you should receive a letter outlining the program later this month. You can also visit to view transcripts and records.

How Does The Penalty Waiver Program Work?

Technically, the penalty relief program is automatically applied to taxpayers with penalties on unpaid tax bills, but there are some limitations and other mitigating factors:

  • The waiver is limited penalties on tax bills of $100,000 or less.
  • You should receive an automatic refund if you paid the penalty fee before the relief was announced.
  • If you’re not eligible for this relief, the IRS has suggested applying for the waiver under the First-Time Abate program.
  • The IRS has not waived interest on your unpaid 2020 or 2021 tax bill (even though penalties could be the larger of the two outstanding amounts owed, interest on the outstanding balance will remain on your account until your bill is paid in full).

You Should Also be Aware of Potential Scammers Posing as IRS Representatives

The IRS will ONLY be sending letters addressing the penalty relief program. Emails and texts discussing any form of penalty relief are FAKE and should be considered phishing attempts to scam money.

Additionally, the IRS will not ask for payment via gift cards. You can make required payments to the IRS by check using the address listed in the letter. Payments can also be made electronically to the IRS using a bank account transfer or credit or debit cards.

Wondering if You Qualify For Penalty Relief or a Refund?

Odds are, if you’re among the 5 million with unpaid taxes from the 2020 or 2021 fiscal years, you qualify for a penalty relief waiver. And if you already paid a penalty on delinquencies for this time period, you can likely expect a refund from the IRS.

If you haven’t already received a notice or have more questions — Get in touch for a FREE consultation!


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