Taxpayers who had a balance due for tax years 2020 and/or 2021 and did not receive balance due reminder notices due to the pandemic-related pause, may be eligible for automatic penalty relief.
The Internal Revenue Service will automatically waive failure to pay penalties on assessed taxes less than $100,000 for tax years 2020 or 2021.
Individual, business, estate, trust or tax-exempt taxpayers are eligible for automatic failure to pay penalty relief if they:
They do not have to take any additional actions to receive this relief:
Taxpayers with assessed taxes of $100,000 or more are not eligible for automatic relief and can apply for penalty relief under the reasonable cause criteria or the First-Time Abate program. Visit IRS.gov/penaltyrelief for details.
Taxpayers can find details about their penalty relief by viewing their transcript. Taxpayers with questions on penalty relief can contact the IRS after March 31, 2024.
Notices and letters provide taxpayers with information about the actions they need to take. Many notices have QR codes that help direct taxpayers to their online tax accounts. In addition, these letters inform the taxpayer of the status of their unpaid balance or unfiled return, options for resolution and their rights in the collection process.
The IRS also urges people not to wait to respond to a notice. Tax bills quickly get worse with time as fees, penalties and interest accumulate. In addition, if a taxpayer doesn't respond, it can lead to more serious IRS collection activity such as liens or levies.
The IRS encourages taxpayers who owe taxes or have an overdue unfiled tax return to review IRS payment options and file all outstanding tax returns. The IRS website has online resources with helpful information, including details on making payments and payment programs as well as unfiled returns.
For taxpayers who can't pay their tax bill, the IRS offers several options to help them meet their obligations. Taxpayers struggling to meet their tax obligation may consider these options.
It's important to contact the IRS and make arrangements to voluntarily pay the tax due. If taxpayers don't contact the IRS, the IRS may take one or more of the following actions to collect the taxes.
A federal tax lien is the government's legal claim against a taxpayer's property when they neglect or fail to pay a tax debt. The lien protects the government's interest in all taxpayer's property, including real estate, personal property and financial assets.
A federal tax lien occurs after the IRS:
The best way to get rid of a federal tax lien is to pay the taxes. When conditions are in the best interest of both the government and the taxpayer, other options exist for reducing the impact of a lien.
The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to a taxpayer's property.
A levy is a legal seizure of property, or rights to property, to satisfy a tax debt. When property is levied, it will be sold to help pay the taxpayers tax debt. If wages or bank accounts are seized, the money will be applied to the taxpayer's tax debt.
Generally, before property is seized, the IRS will send a taxpayer this type of notice. If they don't pay their overdue taxes, make other arrangements to satisfy the tax debt or request a hearing within 30 days of the date of this notice, the IRS may seize the taxpayer's property.
A summons legally compels a taxpayer or a third party, to meet with the IRS and provide information, documents or testimony for an IRS investigation.
The Department of State will not issue or renew a passport to anyone who has been certified by the IRS as having a seriously delinquent tax debt. Seriously delinquent tax debts are legally enforceable, unpaid federal tax debt (including assessed penalties and interest) totaling more than $59,000 (adjusted yearly for inflation). They may also revoke a passport previously issued to these taxpayers. For information on passports, refer to Revocation or Denial of Passport in Cases of Certain Unpaid Taxes.