IRS Will Send A Special Reminder Letter To Taxpayers Regarding Their Debt
The IRS said that it will soon start delivering automated collection notifications again after a two-year break.
The agency put an end to automatic collection notices in February 2022 to focus on processing the backlog of unprocessed returns and correspondence.
But the IRS announced last week that notices will resume next month and that it will issue a “special reminder letter” outlining taxpayers’ liability, ways to settle the balance, and potential penalty reduction.
On the other hand, for millions of taxpayers with balances under $100,000 from returns filed in 2020 and 2021, the IRS is waiving around $1 billion in late payment penalties. Although there is an automatic reprieve, on April 1, 2024, late payment penalties for amounts owed from 2020 and 2021 will start up again.
The IRS usually sends out CP14 notices (initial IRS notice of unpaid tax amount) and then three or four reminder letters every five weeks, according to Darren Guillot, a former deputy commissioner of the IRS’s small business division.
“The vast majority of taxpayers can set up a payment plan for themselves” by scanning a QR code on their IRS notice, he said.
For taxpayers with debt from 2020 or 2021, the reduction from late payment penalties may be wonderful news, but you still have to pay off those bills.
Establishing an online long-term payment plan is possible if your total debt, including interest, penalties, and taxes, is $50,000 or less. Additionally, you can arrange an online short-term payment plan for 180 days or fewer for a total cost of less than $100,000 which includes interest, penalties, and taxes.
