Tax season is always full of surprises, and this year is proving to be no exception. With the pandemic bringing on an unprecedented level of economic uncertainty, the IRS has implemented new rules to help ease the load.
One of the new changes is a potential penalty tax relief for taxpayers facing challenges with meeting their payment or filing requirements. In the event of a failure to file, failure to pay, underpayment of tax, or any similar penalty, eligible taxpayers may choose to take advantage of the new break.
The penalty relief program is available to all taxpayers impacted by the coronavirus pandemic, regardless of income level. A taxpayer will be eligible if they had a reasonable cause for not being able to file or pay on time due to the pandemic. This includes things like having limited access to funds to meet tax obligations, being ill or quarantined, caring for a family member, closing of place of business, or other impacts related to the pandemic.
To take advantage of the penalty relief, taxpayers will need to submit a statement in writing to the IRS. This statement should include the taxpayer’s name, address, and taxpayer identification number. They will also need to provide detailed information explaining why they faced difficulties complying with the filing or payment requirements.
Once the statement is submitted, the IRS will evaluate the individual case and decide whether the taxpayer is eligible for the penalty relief program. If approved, the IRS will waive the penalty and interest on any amount that the taxpayer is unable to pay due to the pandemic.
While this new break from the IRS is welcome news for taxpayers facing difficult financial times, it’s always a good idea to take the necessary steps to stay on top of your taxes. By understanding the penalty relief program and understanding your individual financial situation, you can take the necessary steps to make sure you are in compliance and avoid any penalties from the IRS.
