Lahaina property on Lokia Street. File PC: Lahaina Community Land Trust
The Internal Revenue Service today announced new penalty relief for Maui wildfire victims impacted by the historic 2023 wildfires, which caused a reported $5.5 billion in damages.
The IRS will be providing failure to pay penalty relief to nearly 600 Maui taxpayers, which equates to about $300,000 in relief – an average of about $500 per taxpayer. This is separate from disaster relief previously announced in August 2023, that postponed various tax-filing and tax-payment deadlines for individuals and businesses in Maui and Hawaiʻi counties until Aug. 7, 2024.
Due to the widespread damage and closure of postal facilities, the IRS did not mail the initial notice, typically the CP14 notice, to taxpayers who filed a balance due return in Maui and Hawaii counties, between Aug. 17, 2023, and Jan. 30, 2024. As a result, the IRS is removing any failure to pay penalties added to balance due tax periods from the date the IRS would have normally mailed the notice until the date the penalties were fully paid or through Dec. 30, 2024, whichever is earlier.
ARTICLE CONTINUES BELOW ADARTICLE CONTINUES BELOW AD
Qualifying taxpayers with an impacted disaster address on the day the notice would normally have been issued are eligible, regardless of if their address has changed since then.
This penalty relief is automatic. Maui wildfire disaster taxpayers don’t need to take any action to get it. Eligible taxpayers who already fully paid these penalties will benefit from the relief, too. If the penalties have been paid, the IRS will issue a refund or credit the payment toward another outstanding tax liability.
Receive the latest notices from the IRS
ARTICLE CONTINUES BELOW AD
The IRS understands that some Maui residents may still be displaced. Affected taxpayers are urged to contact the IRS to update their address as soon as possible to ensure they receive future correspondence. The IRS advises wildfire victims in Maui and Hawaii counties to update their current address with the IRS by calling the IRS Disaster Hotline at 866-562-5227, or by filing Form 8822, Change of Address. The IRS also recommends that taxpayers notify the post office serving the old address, if their address has changed.
The IRS will mail impacted taxpayers a notice in the next couple of weeks informing them why their penalties were removed and any refund amounts or balances due remaining on the affected tax years.
Improving taxpayer service and help for Maui taxpayers still needing assistance
ARTICLE CONTINUES BELOW AD
The IRS has taxpayer services available in person, over the phone and online. The IRS reminds taxpayers with unpaid tax debts that there are a number of payments options and online tools available to help.
The IRS also encourages taxpayers unable to fully pay their tax balance to sign into and create an IRS Online Account where they can learn about payment plan options and apply for a new payment plan. This account allows taxpayer to view:
- The amount they owe.
- Payment history and any scheduled or pending payments.
- Payment plan details and revise details of an existing payment plan.
- Digital copies of select notices from the IRS.
- Most recently filed tax return, including adjusted gross income, and access transcripts or tax compliance reports.
Eligible business taxpayers also now have the option to sign in and create a Business Tax Account to view and submit balance due payments. Additionally, the Tax Pro Online Account has more self-service options for tax professionals, including easier navigation to secure two-way messaging where authorized tax professionals can digitally communicate with the IRS on behalf of their clients.
What taxpayers should know about interest
The IRS is required by law to charge interest when a tax balance is not paid on time. Interest cannot be reduced due to reasonable cause. Interest is based on the amount of tax owed for each day it’s not paid in full. The interest is compounded daily, so it’s assessed on the previous day’s balance plus the interest. Interest rates are determined every three months and can vary based on type of tax; for example, individual or business tax liabilities. More information is available on the interest page of IRS.gov.