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IRS Provides Relief from Additions to Tax for Certain Taxpayers’ Failure to Timely Pay Income Tax for Taxable Years 2020 and 2021

2024-01-04

IRS Notice 2024-7 provides relief for certain taxpayers from additions to tax for the failure to pay income tax with respect to certain income tax returns for taxable years 2020 and 2021. These additions to tax for the failure to pay income tax will be waived or, to the extent previously assessed or paid, will be abated, refunded, or credited to other outstanding tax liabilities. There are situations in which the relief provided in the notice does not apply.

The relief granted in this notice applies to additions to tax under §§6651(a)(2) and 6651(a)(3) for the failure to pay taxes owed, but does not apply to any amount of interest that accrues as a result of any underpayment.

A. Eligible Taxpayers

The relief granted in the notice is available only to eligible taxpayers for accruals of additions to tax under §§6651(a)(2) and 6651(a)(3) for the failure to pay during the relief period. An “eligible taxpayer” is any taxpayer:

  • Whose assessed income tax for taxable 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 taxable 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 §6651(a)(2) or 6651(a)(3) with respect to an eligible return for taxable year 2020 or 2021.
B. Eligible Returns

The relief granted in this notice is available only to eligible taxpayers who have filed an eligible return. 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
C. Relief Period

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. Eligible taxpayers will remain liable for any addition to tax for the failure to pay tax that accrued before or after the relief period. Eligible taxpayers will also remain liable for interest that accrues during the relief period as a result of any underpayment of tax for taxable year 2020 or 2021.

D. Exceptions to Relief

The relief described in the notice does not apply to any addition to tax, penalty, or interest that is not specifically listed in the grant of relief under section III of this notice. In addition, the relief described in section III of the notice is not available with respect to any return for which the penalty for fraudulent failure to file under §6651(f) or the penalty for fraud under §6663 applies. The relief described in the notice also does not apply to any addition to tax for the failure to pay in an offer in compromise under §7122 that is accepted by the IRS because acceptance of the offer conclusively settles all of the liabilities in the offer under §301.7122-1(e)(5) of the Procedure and Administration Regulations (26 CFR part 301). Finally, the relief described in the notice does not apply to any addition to tax for the failure to pay that is settled in a closing agreement under §7121 or finally determined in a judicial proceeding.