Act Fast to Qualify for IRS Penalty Relief

The deadline to qualify for IRS penalty relief for late-filed 2019 and 2020 tax returns is rapidly approaching. Taxpayers who have not yet filed their returns have until September 30 to benefit from this recently-announced penalty abatement.

To help struggling taxpayers affected by the COVID-19 pandemic, the IRS announced it would relieve certain taxpayers from failure-to-file penalties and information return penalties incurred on 2019 and 2020 tax returns.

The IRS is also taking an additional step to help those who paid these penalties already. Nearly 1.6 million taxpayers will automatically receive more than $1.2 billion in refunds or credits. The IRS expects to process many of these payments by the end of September.

The late-to-file penalty is typically assessed at a rate of 5 percent per month, up to 25 percent of the unpaid tax, for late-filed federal income tax returns. This relief applies to forms in the Form 1040 and 1120 series and others listed in Notice 2022-36.

Eligible income tax returns filed on or before September 30, 2022, are eligible for this relief.

According to the IRS:

Besides providing relief to both individuals and businesses impacted by the pandemic, this step is designed to allow the IRS to focus its resources on processing backlogged tax returns and taxpayer correspondence to help return to normal operations for the 2023 filing season.

“Throughout the pandemic, the IRS has worked hard to support the nation and provide relief to people in many different ways,” said IRS Commissioner Chuck Rettig. “The penalty relief issued today is yet another way the agency is supporting people during this unprecedented time. This penalty relief will be automatic for people or businesses who qualify; there’s no need to call.”

Visit the IRS website for more information.