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Penalty Relief Now Offered By IRS for Late Filers
The Internal Revenue Service announced it is providing penalty relief to most individual and business taxpayers who filed their 2019 or 2020 returns late due to the COVID pandemic, while refunding $1.2 billion in penalties to nearly 1.6 million taxpayers who filed late. They issued Notice 2022-36 to describe the effort, which offers penalty relief to most people and businesses who file certain 2019 or 2020 returns late. The IRS is going further to help the taxpayers who have already paid the penalties by refunding them with automatic payments that are expected to be completed by the end of September.
The relief applies to the penalty imposed for failing to file, which is usually assessed at a rate of 5% per month and up to 25% of the unpaid tax when a federal income tax return is filed late. This relief applies to forms in both the Form 1040 and 1120 series, as well as others listed in Notice 2022-36, posted today on IRS.gov.
To qualify for the relief, any eligible income tax return must be filed on or before Sept. 30, 2022.
The IRS is also offering penalty relief to banks, employers and other businesses required to file various information returns, such as those in the 1099 series. To qualify for relief, eligible 2019 returns must have been filed by Aug. 1, 2020, and eligible 2020 returns must have been filed by Aug. 1, 2021. Check with your tax attorney or accountant.
As both deadlines fell on a weekend, a 2019 return will still be considered timely for purposes of relief provided under the notice if it was filed by Aug. 3, 2020, and a 2020 return will be considered timely for purposes of relief provided under the notice if it was filed by Aug. 2, 2021. The notice provides details on the information returns that are eligible for relief.