Nearly Five Million Eligible Taxpayers Received Failure to Pay Penalty Relief Due to the Effects of the Pandemic

Report Information

Summary

Our review of the nearly 5 million taxpayers determined that the IRS accurately identified and issued penalty relief to more than 99 percent of eligible taxpayers. The IRS took several steps to administer the FTP penalty relief and help taxpayers pay the remaining penalty. The IRS: • Published information about the FTP penalty relief and updated internal guidance to reflect the relief available to taxpayers. • Developed and implemented programming to identify eligible taxpayers and provided appropriate relief. • Created and issued Letters 38, Reminder, Notice Resumption, that informed taxpayers that the IRS is resuming normal operations. Of the 4.9 million eligible taxpayers who received penalty relief, 3.6 million have taken steps to resolve their outstanding balance. The IRS issued letters from January 2024 through March 2024 that notified the remaining 1.3 million taxpayers that normal collection operations would resume beginning April 2024. The letter provided the taxpayer with the amount owed, including penalties and interest, and options for paying the outstanding balance. However, we identified approximately 2,100 taxpayers who were potentially eligible for the FTP penalty relief, but their tax accounts were not marked as eligible as of April 2024. Collectively, we estimate these taxpayers are potentially entitled to more than $463,000 in FTP penalty relief. Since this is a one-time relief, which ended in March 2024, the IRS does not need to make programming changes to identify other potentially affected taxpayers. Therefore, we are not making a recommendation related to programming changes. However, our findings could be useful to the IRS if similar programs are implemented in the future.