The IRS has decided to forgive failure-to-pay penalties on most of the income tax returns for 2020 and 2021.
As an example: You filed an extension for your 2020 return April 15, 2021, then filed and paid the balance due August 15, 2021. The balance due should have been paid April 15, but since you paid it four months later, you were charged penalty and interest on the amount due. This relief provision will refund/forgive the penalty portion – which is one-half percent per month (or 2% of the tax amount paid 8/15/21 in this example). You are still charged interest, but hey- any forgiveness is a gift.
The news release is found at https://www.irs.gov/newsroom/irs-helps-taxpayers-by-providing-penalty-relief-on-nearly-5-million-2020-and-2021-tax-returns-restart-of-collection-notices-in-2024-marks-end-of-pandemic-related-pause or if you wish, a pdf copy is available here. The appropriate provisions are more clearly summarized in notice 2024-7 available here.