The Internal Revenue Service (IRS) recently announced that it will provide penalty relief to qualifying taxpayers who filed late taxes for the 2019 and 2020 tax years. The agency explained that the move is part of the agency’s broader plan to use recent funding to help the agency get back to normal for the 2023 tax year.
What is this relief?
Relief is available for certain taxpayers who received a penalty for failure to file during 2019 or 2020 tax years. The IRS states that those who filed in the Form 1040 and 1120 series qualify if they filed on or before September 30, 2022.
The IRS also provides relief to employers and businesses who file information returns like the 1099 series. To qualify, the taxable entity must have filed 2019 returns by August 3, 2020, and 2020 returns by August 2, 2021.
How do I get the penalty relief?
The IRS states that the relief is automatic. It claims qualifying taxpayers will not need to call or take additional action to receive forgiveness for an outstanding penalty.
What if I already paid a penalty?
The IRS is working to help those who already paid the penalty. The agency stated it will automatically provide over $1.2 billion in refunds or credits to over 1.5 million taxpayers who already paid. The agency states it plans to have most of these payments complete before October 2022.
Is there anything else I should know?
Essentially, Notice 2022-36 gives taxpayers relief for certain civil penalties that result from 2019 and 2020 returns. The IRS will waive or, if the penalty was already issued, abate, refund or credit the penalty amount as appropriate.
But, as noted above, there is a deadline. Taxpayers must decide and file by September 30, 2022. Those who believe they qualify but are concerned about their taxes are wise to seek legal counsel to review their tax obligations and get a better understanding of how the relief program will impact their situation.