The IRS has announced widespread penalty relief for those who filed late during the Covid-19 . [+] pandemic.
Given the pandemic, did you file your 2019 or 2020 tax returns late? It happened to millions of individuals and businesses. And now, on the same day that the Biden Administration announced wide student debt relief, the IRS has issued Notice 2022-36 to provide sweeping penalty relief to most people and businesses who file certain 2019 or 2020 returns late.
The IRS is also refunding many penalties if you already paid. Nearly 1.6 million taxpayers will automatically receive more than $1.2 billion in refunds or credits. Many of these payments will be completed by the end of September. The penalty relief is automatic for people or businesses who qualify, there is no need to call or write for a refund.
The relief applies to the failure to file penalty. The penalty is typically 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 on IRS.gov. To qualify, any eligible income tax return must be filed on or before Sept. 30, 2022. In addition, the IRS is providing 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, the notice states that eligible 2019 returns must have been filed by Aug. 1, 2020, and eligible 2020 returns must have been filed by Aug. 1, 2021.
Because both of these 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. The notice also provides details on relief for filers of various international information returns, such as those reporting transactions with foreign trusts, receipt of foreign gifts, and ownership interests in foreign corporations. To qualify for this relief, any eligible tax return must be filed on or before Sept. 30, 2022.