If you owe income tax for tax years 2020 or 2021 and you have received an initial balance due notice from the IRS, you may be eligible for relief from late payment penalties. The IRS has announced in Notice 2024-07 that it will waive or refund the additions to tax for the failure to pay income tax for certain taxpayers who meet the criteria described in the notice. This relief is intended to help taxpayers who were affected by the COVID-19 pandemic and did not receive automated reminder notices from the IRS during a temporary suspension period. In this article, we will explain what the relief entails, who can benefit from it, and how to apply for it.

What is the Relief?

The relief granted by the IRS is a waiver or refund of the additions to tax for the failure to pay income tax that accrued during a relief period for tax years 2020 or 2021. The additions to tax are imposed by sections 6651(a)(2) and 6651(a)(3) of the Internal Revenue Code and apply to taxpayers who do not pay the amount of tax shown or required to be shown on their income tax returns by the due date or within a certain period after receiving a notice and demand from the IRS. The additions to tax are calculated as a percentage of the unpaid tax and increase over time until the tax is paid in full.

The relief period is the period that begins on the date the IRS issued an initial balance due notice to the eligible taxpayer, or February 5, 2022, whichever is later, and ends on March 31, 2024. The initial balance due notice is the first notice that informs the taxpayer of the amount of tax owed and instructs the taxpayer how to pay the tax liability. The IRS normally sends additional automated reminder notices to the taxpayer if the tax liability is not paid after receiving the initial notice. However, due to the COVID-19 pandemic and the national emergency declared by the President, the IRS temporarily suspended the mailing of certain automated reminder notices from February 9, 2022, until the end of calendar year 2023. The IRS will resume issuing automated reminder notices in calendar year 2024 for balances due for tax years 2021 and earlier.

The IRS will automatically waive or refund the additions to tax for the failure to pay income tax that accrued during the relief period for eligible taxpayers who filed eligible returns. There is no need for taxpayers to request this relief. The IRS will issue a notice to each eligible taxpayer that reflects the updated amount owed and any refund or credit resulting from the automatic abatement. The relief does not apply to any amount of interest that accrues as a result of any underpayment of tax for tax years 2020 or 2021. The relief also does not apply to any other addition to tax, penalty, or interest that is not specifically listed in the notice.

Who is Eligible?

The relief is available only to eligible taxpayers who filed eligible returns. An eligible taxpayer is any taxpayer:

• Whose assessed income tax for tax year 2020 or 2021, as of December 7, 2023, is less than $100,000, excluding any applicable additions to tax, penalties, or interest;
• Who was issued an initial balance due notice (including, but not limited to Notice CP14 or Notice CP161) on or before December 7, 2023, for tax year 2020 or 2021; and
• Who is otherwise liable during the relief period for accruals of additions to tax for the failure to pay under section 6651(a)(2) or 6651(a)(3) with respect to an eligible return for tax year 2020 or 2021.

An eligible return is one of the following income tax returns:

• Income Tax Returns of Individuals:
• Form 1040, U.S. Individual Income Tax Return
• Form 1040-C, U.S. Departing Alien Income Tax Return
• Form 1040-NR, U.S. Nonresident Alien Income Tax Return
• Form 1040-PR, Declaración de la Contribución Federal sobre el Trabajo por Cuenta Propia
• Form 1040-SR, U.S. Tax Return for Seniors
• Form 1040-SS, U.S. Self-Employment Tax Return
• Income Tax Returns of Trusts, Estates, Certain Taxable Corporations, and Certain Tax-Exempt Organizations:
• Form 1120, U.S. Corporation Income Tax Return
• Form 1120-C, U.S. Income Tax Return for Cooperative Associations
• Form 1120-F, U.S. Income Tax Return of a Foreign Corporation
• Form 1120-FSC, U.S. Income Tax Return of Foreign Sales Corporation
• Form 1120-H, U.S. Income Tax Return for Homeowners Associations
• Form 1120-L, U.S. Life Insurance Company Income Tax Return
• Form 1120-ND, Return for Nuclear Decommissioning Funds and Certain Related Persons
• Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return
• Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations
• Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts
• Form 1120-RIC, U.S. Income Tax Return for Regulated Investment Companies
• Form 1120-S, U.S. Income Tax Return for an S Corporation
• Form 1120-SF, U.S. Income Tax Return for Settlement Funds (Under Section 468B)
• Form 1041, U.S. Income Tax Return for Estates and Trusts
• Form 1041-N, U.S. Income Tax Return for Electing Alaska Native Settlement Trusts
• Form 1041-QFT, U.S. Income Tax Return for Qualified Funeral Trusts
• Form 990-T, Exempt Organization Business Income Tax Return

How to Apply?

There is no need for taxpayers to apply for the relief. The IRS will automatically waive or refund the additions to tax for the failure to pay income tax that accrued during the relief period for eligible taxpayers who filed eligible returns. The IRS will issue a notice to each eligible taxpayer that reflects the updated amount owed and any refund or credit resulting from the automatic abatement.

If you have already paid the additions to tax for the failure to pay income tax that accrued during the relief period, you do not need to take any action. The IRS will automatically refund or credit the amount to your other outstanding tax liabilities, as appropriate.

If you have not paid the additions to tax for the failure to pay income tax that accrued during the relief period, you do not need to take any action. The IRS will automatically reduce the amount owed by the amount of the additions to tax that accrued during the relief period.

If you have any questions or concerns about the relief, you can contact the IRS at the phone number or address listed on your notice. You can also visit the IRS website at www.irs.gov for more information and resources.

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