Taxpayers who owed taxes for the years 2020 or 2021 and didn’t receive reminders due to the pandemic-related pause may be eligible for automatic penalty relief. This includes businesses operating in Louisiana.
Here’s what this penalty relief means:
The Internal Revenue Service (IRS) will automatically waive failure-to-pay penalties on assessed taxes less than $100,000 for tax years 2020 or 2021. This is excellent news for businesses in Louisiana, particularly those that faced financial challenges during the pandemic.
Individuals, businesses, estates, trusts, or tax-exempt organizations are eligible for automatic failure-to-pay penalty relief if they:
- Filed a tax return (such as Form 1040, 1041, 1120 series, or Form 990-T) for tax years 2020 and/or 2021.
- Were assessed taxes of less than $100,000.
- Received an initial balance due notice, typically the CP14 or CP161, between February 5, 2022, and December 7, 2023.
Louisiana businesses do not have to take any additional actions to receive this relief:
- If they made payments on their account or their balance is paid in full, they are eligible for automatic failure-to-pay penalty relief on assessed taxes less than $100,000 per year.
- A credit will automatically be applied to any other tax year with a balance due; otherwise, they will receive a refund.
- If their address has changed, they’ll need to update their account to make sure they receive any IRS refunds or notices.
For Louisiana businesses with assessed taxes of $100,000 or more, automatic relief may not apply, but they can still apply for penalty relief under the reasonable cause criteria or the First-Time Abate program. This is important for larger businesses in the state.
Additionally, businesses in Louisiana should be aware that the relief measures can help them manage their tax obligations more effectively. They can check their relief details in their tax transcripts and contact the IRS after March 31, 2024, if they have any questions or need further assistance.
For Louisiana businesses that can’t pay their tax bill in full:
- Payment plans: Most businesses that owe taxes can set up a payment plan through the Online Payment Agreement tool without the need for paperwork or calls. This can help businesses in Louisiana manage their tax payments more comfortably, especially if they are recovering from financial difficulties.
- Offer in Compromise: This option allows qualifying taxpayers, including businesses, to settle their tax liabilities for less than the total amount owed. Louisiana businesses should check their eligibility and follow the IRS guidelines for this relief.
- Temporarily delaying collection: Louisiana businesses can contact the IRS to request a temporary delay of the collection process if they are unable to pay. While penalties and interest continue to accrue, this temporary relief can provide businesses with breathing room to improve their financial condition.
The benefit of these relief measures extends to Louisiana businesses by helping them navigate their tax obligations during challenging times and ensuring they can continue to operate and contribute to the state’s economy. It’s essential for Louisiana businesses to explore these options and take advantage of the relief provided by the IRS to alleviate their tax burdens. This can ultimately promote economic stability and growth within the state.
