Understanding IRS Notice 2024-7: Relief for Taxpayers Impacted by COVID-19

The IRS has recently issued Notice 2024-7, offering a beacon of hope to almost 5 million taxpayers who did not receive automated collection reminder notices during the pandemic. This relief targets those affected by the pandemic, particularly for the tax years 2020 and 2021. 

Who is Eligible for Notice 2024-07?

Taxpayers eligible for this relief include: 

• Those with an assessed income tax below $100,000 for 2020 or 2021 (excluding additional taxes, penalties, or interest).
• The $100,000 limit applies separately to each tax return and each entity. 
• Eligible taxpayers include individuals, businesses, trusts, estates, and tax-exempt organizations, and estates that filed certain Forms 1040, U.S. Individual Income Tax Return; 1120, U.S. Corporation Income Tax Return; 1041, U.S. Income Tax Return for Estates and Trusts; and 990-T, Exempt Organization Business Income Tax Return, and income tax returns in those series for tax years 2020 or 2021 
• Those who received an initial balance due notice between February 5, 2022, and December 7, 2023. 
• Those liable for accruals of failure-to-pay penalties during the relief period for eligible 2020 or 2021 tax returns. 

What is the Relief Period for Notice 2024-07?

The relief covers the period from when the initial balance due notice was issued or from February 5, 2022, whichever is later, until March 31, 2024. Importantly, liabilities for penalties accrued outside this period remain. 

How Do I Qualify or Enroll in the Relief Program Under Notice 2024-07?

The relief is automatic. Taxpayers don’t need to take any additional steps. Those who have paid eligible penalties will receive refunds or credits towards other tax liabilities. 

When will the IRS Resume Collection Notices?

Be aware that the IRS will resume sending automated collection and reminder notices in January 2024 to individuals with tax debts prior to tax year 2022, and businesses, tax-exempt organizations, and estates with tax debt prior to 2023.   

Important to note, the IRS only suspended collection reminder notices during COVID-19; they did not stop mailing initial balance due notices for taxpayers including the CP14 and CP161 notices.  

What is the Potential Impact of Notice 2024-07?

his relief affects around 4.7 million taxpayers, with an estimated $1 billion in total savings, or $206 per return. It’s a significant step by the IRS to ease the burden on those impacted by the pandemic with nearly 70% of the qualified individual taxpayers reporting income under $100,000.  

Notice 2024-7 represents a significant relief effort by the IRS, acknowledging the challenges faced by taxpayers during the pandemic. As tax professionals, it’s crucial to inform and guide our clients through these changes.  

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As a dually licensed Orange County tax attorney and CPA, the team behind Evolution Tax & Legal specializes in helping individuals and businesses alike to reduce U.S. tax bills, comply with IRS tax filing requirements, and avoid tax audits and penalties. Contact Evolution Tax & Legal today to learn how we can help you.