January 19, 2024

IRS Announces Key Updates and Relief Measures

Tax Filing Commences for 2023 Earnings The Internal Revenue Service (IRS) has announced that taxpayers can start filing their taxes on 2023 earnings from January 29, 2024. This marks the official commencement of the 2024 tax season, signaling the need for taxpayers to prepare their documents and filings.

Significant Penalty Relief for Taxpayers In a major development, the IRS is offering penalty relief for eligible taxpayers who were impacted by the pause in collection notices during 2020 and 2021. This relief comes as part of the IRS’s response to the COVID-19 pandemic, during which it temporarily halted the mailing of automated payment reminders for overdue tax bills. While reminder notices were suspended, penalties for failing to pay continued to accrue, placing an added burden on taxpayers.

This new penalty relief is expected to benefit nearly 5 million taxpayers, providing an estimated $1 billion in tax relief. Targeted primarily at individuals earning under $100,000 annually, this relief represents a significant easing of the financial burden for many.

Staggered Account Adjustments The IRS has detailed a phased approach to making these adjustments. Individual accounts have already been adjusted, with business accounts set to follow in late December to early January. Trusts, estates, and tax-exempt organizations will see adjustments in late February to early March 2024.

For those eligible, this relief is automatic, requiring no action on their part. Taxpayers who have already paid the penalties but qualify for relief will receive refunds or have their payments credited against outstanding tax liabilities. However, it’s important to note that the failure-to-pay penalty will resume on April 1, 2024, for eligible taxpayers.

IRS Commissioner Comments on Relief Measures IRS Commissioner Danny Werfel emphasized the agency’s commitment to supporting taxpayers, especially those who haven’t received communication from the IRS in a while and might face a sudden tax bill. This penalty relief is part of the IRS’s broader effort to provide a more taxpayer-friendly approach.

Important Dates and Deadlines for 2024 Tax Season

  • Tax Season Start Date: January 29, 2024.
  • Federal Tax Return Deadline: April 15, 2024.
  • Extended Deadlines for Maine and Massachusetts: April 17, 2024, due to state holidays.
  • Special Provisions for Disaster Areas: Additional filing time may be available.

The IRS expects to process over 128.7 million individual tax returns by the April 15 deadline, with most refunds issued within 21 days, and many available by February 27. However, some returns requiring additional review may take longer.

IRS Launches Direct File Program In a transformative move, the IRS is introducing the pilot Direct File program in 2024. This program allows eligible taxpayers to file their 2023 federal tax returns online directly with the IRS, free of charge. Initially available in phases, the program is expected to be fully operational by mid-March.

Eligible residents in 12 states, including those from states without an income tax, can participate if they meet specific criteria. Four states – Arizona, California, Massachusetts, and New York – are collaborating with the IRS to integrate state taxes into the program.

Commissioner Werfel assures taxpayers of continuous improvements in IRS operations, emphasizing the agency’s commitment to utilizing new funding to enhance taxpayer services.

Our sister company, Heritage Tax Company, is accepting new tax clients.  Click here for the New Client Application.

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