Starting this summer, taxpayers who have a history of compliance will not need to opt in to an IRS program to get penalty relief if they fail to file or pay their taxes, the agency announced Wednesday.

The IRS updated its systems so it will identify and remove penalties for certain taxpayers who have a consistent history of compliance over the last three years. It also will notify the taxpayer that the relief was given.

“Automatic Exemption from Penalty reflects the IRS’ commitment to making the payment of taxes owed simpler and more consistent,” IRS CEO Frank Bisignano said in a statement. “By automatically applying penalty relief, the IRS recognizes that taxpayers who historically pay on time should not have to make a formal request for relief that is routinely granted.”

The new automatic exemption penalty process will apply to original returns beginning with tax year 2025, and 2026 quarterly returns and future tax periods. Some returns, including information returns and returns filed in response to specific transactions, generally aren’t eligible, the IRS said.

Historically, the IRS would remove penalties if a taxpayer does not file, pay, or deposit to cover what’s owed and it’s the first time it’s happened in the previous three years. Taxpayers had to opt in to the program, which left millions of taxpayers — especially those who could not afford representation — missing out on the relief.

Some taxpayers may still receive penalty notices as the IRS phases out this first-time abatement program this summer. However, this is a welcome relief for taxpayers and tax practitioners which eliminates the need to formally submit a request for the abatement of such penalties.

This information was sourced from Bloomberg Industry Group, Inc.  For more information or to speak with an expert regarding your tax compliance needs, please contact Christopher Cox at ccox@caroprese.com or via telephone at 973-475-8090.