The IRS will provide penalty relief to most people and businesses who file certain 2019 or 2020 returns late. However, to be eligible, tax returns must be filed no later than Sept. 30, 2022.
For the 1.6 million taxpayers who already paid these penalties, the IRS said it would automatically issue more than $1.2 billion in refunds or credits, many of which will be completed by the end of September, according to a press release.
“Throughout the pandemic, the IRS has worked hard to support the nation and provide relief to people in many different ways,” IRS Commissioner Chuck Rettig said in the release. “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.”
In addition to providing relief, the IRS said this measure will enable it to “focus its resources on processing backlogged tax returns and taxpayer correspondence to help return to normal operations for the 2023 filing season.”
Banks, employers and other businesses are also eligible for the refund, but to qualify, 2019 returns must have been filed by Aug. 1, 2020, and eligible 2020 returns must have been filed by Aug. 1, 2021.
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“Penalty relief is a complex issue for the IRS to administer,” Rettig said in the release. “We’ve been working on this initiative for months following concerns we’ve heard from taxpayers, the tax community and others, including Congress. This is another major step to help taxpayers, and we encourage those affected by this to review the guidelines.”
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