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IRS Announces New Penalty Relief and Reporting Changes
The IRS has recently made several important announcements that could significantly impact taxpayers. Here’s a summary of the latest updates:
10/8/20242 min read
IRS Announces New Penalty Relief and Reporting Changes
The IRS has recently made several important announcements that could significantly impact taxpayers. Here’s a summary of the latest updates:
Penalty Relief for Unpaid Taxes
In a major move to assist taxpayers, the IRS has announced new penalty relief for approximately 4.7 million individuals, businesses, and tax-exempt organizations with unpaid balances from the 2020 and 2021 tax years. This relief is automatic, meaning eligible taxpayers do not need to take any action to benefit from it. The IRS is taking these steps to help those affected by the pandemic and to prepare for the resumption of normal collection notices1.
Employee Retention Credit (ERC) Updates
The IRS continues to address issues related to the Employee Retention Credit (ERC). They are sending letters to thousands of taxpayers notifying them of disallowed ERC claims. Employers are urged to review their ERC claims and resolve any incorrect claims to avoid penalties and interest. The IRS has also introduced a second ERC Voluntary Disclosure Program, allowing businesses to repay 85% of the incorrect credit amount without penalties or interest. This program is open until November 22, 20241.
Delay in Form 1099-K Reporting Threshold
Following feedback from taxpayers and tax professionals, the IRS has delayed the implementation of the new $600 reporting threshold for Form 1099-K for third-party settlement organizations. For the calendar year 2023, the IRS will continue to use the previous threshold of $20,000 and more than 200 transactions. This delay aims to reduce taxpayer confusion and provide additional time for implementation1.
Disaster Relief for Hurricane Helene Victims
The IRS has announced disaster tax relief for individuals and businesses affected by Hurricane Helene. This relief includes postponing various tax deadlines to May 1, 2025, for affected areas in Alabama, Georgia, North Carolina, South Carolina, and parts of Florida, Tennessee, and Virginia. This measure is part of the IRS’s ongoing efforts to support those impacted by natural disasters2.
Additional Relief for Taxpayers Affected by Terrorist Attacks in Israel
In response to recent terrorist attacks in Israel, the IRS is providing additional tax relief to affected individuals and businesses. The agency has postponed a wide range of deadlines for filing federal returns, making tax payments, and performing other time-sensitive tax-related actions until September 30, 20252.
These updates reflect the IRS’s commitment to supporting taxpayers through challenging times and ensuring compliance with tax laws. Stay informed about these changes to take full advantage of the available relief and avoid potential penalties.
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