IRS announces penalty relief for millions of taxpayers

The news comes as a surprise to many Americans who have seen an intensification of IRS impositions in the last three years, as part of a more aggressive policy to collect taxes.

The Internal Revenue Service said it will provide relief from nonpayment penalties to approximately 4.7 million taxpayers who qualify for not receiving automatic collection reminder notices from the federal tax agency.

The IRS recently said that about $1 billion in total penalty relief will be provided to individual taxpayers, businesses and tax-exempt organizations for the 2020 and 2021 tax years.

Eligible people include those They did not receive automatic reminders from the IRS to pay overdue tax bills, when the agency temporarily suspended sending such notices in February 2022 “due to the unprecedented effects of the COVID-19 pandemic.”

The tax relief is automatic and applies only to eligible taxpayers who owe less than $100,000 in back taxes.

Fine relief

“The IRS must always be attentive to taxpayers and this penalty reduction is a common sense approach to help people in this situation,” said IRS Commissioner Danny Werfel.

“We are preparing other measures to help taxpayers with overdue bills and we have options for people who are having difficulty making payments,” he added.

Those eligible for the automatic relief were required to file their appropriate tax forms, including income tax returns 1040, 1120, 1041 and 990-T.

The IRS indicated that approximately 70% of taxpayers eligible for relief earn less than $100,000 per year.

Failure to file your tax return on time leads to a monthly penalty of 5%, up to 25% of the tax owed.

The Federal Service also charges penalties and interest if taxes are not paid before the due date or within 21 days of notification of payment.

For 2024, the IRS announced what its various interest rates will be for the first quarter of 2024, including the rate applied to underpayment of taxes.

In the case of individual taxpayers, the interest rate for arrears will be 8% annually, while for corporations it is 7% and 5.5% for a corporate overpayment that exceeds $10,000.

Underpayments by large companies will carry a 10% interest rate.

The interest rates announced by the IRS are calculated from the federal short-term rate determined during October 2023, according to the latest revenue ruling.

IRS intensifies search

Regarding the requirements for returning incorrect relief funds during the pandemic era, the IRS explained that it would send letters to around 20,000 taxpayers demanding that they return tax credits received erroneously during the pandemic era.

The letters demanding the return of pandemic-era relief money relate to an avalanche of uncollectible claims for the pandemic-era relief program known as the Employee Retention Credit (ERC). This is a refundable tax credit designed for businesses that continued payments to their employees during the COVID-19 closures.

A large number of inappropriate ERC claims were pushed by “predatory” or fraudulent promoters against companies, an IRS statement argued.

An investigation by that federal entity’s Criminal Investigation division uncovered more than $2.8 billion in potentially fraudulent ERC claims.

So far, 15 fraudulent ERC cases have led to federal charges, and of those, six have led to convictions. Four of those cases have reached the sentencing phase, with an average sentence of 21 months, the IRS said.

The ERC tax credit, which is somewhat complex, is available to business owners, not individual taxpayers.

Since the program was enacted, “more than 3.6 million claims have been received and ERC-related fraud has worsened over time,” the document states.

Months ago, the federal agency announced an aggressive campaign, promoted by the White House against the rich, to pressure 1,600 millionaires and 75 large business companies that owe hundreds of millions of dollars in back taxes.

Huge expenses

The White House is trying to support the spending plan generated by its subsidy policies to foreign governments and entities, especially to be able to support the funds destined for Ukraine in the war against Russia, which already total more than 150 billion dollars from the US treasury. Now the cost is added in aid to Israel, attacked by Hamas in October and which is currently carrying out an unprecedented offensive in the Gaza Strip against the Hamas terrorist group.

The China-Taiwan dispute is another of the problems that occupy Washington, along with an extensive list of foreign policy expenses promoted by the current government in the White House. Meanwhile, the public debt of the United States exceeds 33 billion dollars (trillions in English).

IRS Chief Commissioner Daniel Werfel said that with increased federal funding from the Biden administration and the help of artificial intelligence tools, the agency now has the means to “go after people who have evaded taxes.”

The previous statements demonstrate that the relief of fines for taxpayers is carried out due to the impact of the pandemic and the lack of automatic warnings of the federal agency and NOT for a change and greater flexibility in the aggressive collection policy of the IRS.

On the contrary, its director clarifies that “the new tools help us discover patterns and trends that we did not see until now. “We now have greater confidence in searching and finding where large corporations and individuals are hiding income.”

The IRS paid about $23 billion less in tax refunds this year, corresponding to 2022 returns, according to a report by the New York newspaper The Epoch Times.

The average refund amount between tax filing seasons fell from $3,175 to $2,878, a 9.3% decrease.

In fiscal year 2022, the IRS collected $2.9 trillion in taxes.

The IRS issued more than 69 million returns worth a total of $198,868 million for the week ending April 7, 2023, compared to the $222,344 million it issued in 2022, down 9.3%.

The Internal Revenue Service said it decided to provide relief on non-payment fines to about 4.7 million people

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