Hopefully COVID is at least waning and as it does, COVID relief provided through the IRS will be waning as well. Like COVID, such relief from IRS isn’t over quite yet, but the deadline for COVID IRS penalty relief is closing in fast.
On August 24, 2022, IRS announced via Notice 2022-36 that penalty relief will apply to most people and businesses who filed certain 2019 or 2020 returns late. To qualify for this relief, any eligible income tax return must be filed on or before September 30, 2022.
The relief applies to the “failure to file” penalty. Such 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. The relief applies to forms in both the Form 1040 and 1120 series as well as others listed in Notice 2022-36.
The nice thing about this penalty relief is that it is automatic. If you filed and paid the penalty already the taxpayer will automatically receive a refund or credit. No writing to IRS pleading for or asserting relief. IRS estimates nearly 1.6 million taxpayers have already paid the penalty and will be receiving refunds totaling more than $1.2 billion.
They say that most eligible taxpayers will receive their refunds by the end of September 2022. Making the relief “automatic” is also helpful to IRS as it will help them avoid some of the time they would incur otherwise in administration of the relief provisions as they continue to work through backlogged returns and try to return to normal operations for the 2023 filing season.
If you have any questions about COVID IRS penalty relief, contact your Henry+Horne advisor today.
Dale Jensen, CPA