The Internal Revenue Service (IRS) issued an administrative notice on August 24, 2022, providing penalty relief for late-filed income tax returns and information returns for the 2019 and 2020 tax years. penalty relief, taxpayers must submit any qualifying tax returns for those years by September 30, 2022. Penalty relief for information returns for 2019 or 2020 will only be granted if the returns were filed before on August 1, 2020 or August 1, 2021, respectively.
The IRS said in its notice that it will pay most refunds or apply credits for late-filed penalties that have already been assessed and paid without the need to file a credit or refund application. . As a precautionary measure, taxpayers may prefer to submit requests for penalty relief to ensure that penalties will be mitigated and penalties that have been paid will be refunded in a timely manner.
The announced penalty relief is intended to help struggling taxpayers affected by the COVID-19 pandemic. It will also allow the IRS to focus its resources on processing pending tax returns and taxpayer correspondence to help bring IRS operations back to normal for the 2023 filing season. The Treasury Department and the IRS have determined that the relief from penalties will allow the IRS to focus its resources more effectively.
Penalty relief for 2019 and 2020 covers additions to tax under IRC §6651(a)(1) for failure to file the following tax returns:
- Form 1040 US Individual Income Tax Returns;
- Form 1041 United States Income Tax Return for Estates and Trusts;
- Form 1120 United States Corporation Income Tax Returns;
- Form 1066 United States Real Estate Mortgage Investment Conduit Income Tax Returns;
- Form 990-PF Returns for Private Foundations or Section 4947(1) Trusts Treated as Private Foundations; and
- Form 990-T Exempt Business Income Tax Returns.
In addition to the aforementioned federal tax filing penalty relief, the notice provides that certain penalties under IRC Sections 6038, 6038A, 6038C, 6039F, 6677, 6698, 6699, and 6721(a)(2)( A) for failure to file information returns in a timely manner is also subject to relief.
Fraudulent failure to file penalties under section 6651(f), or fraud penalty under section 6663, are not eligible for relief. Similarly, penalties included in an accepted Offer in Compromise, settled in a closing agreement under Section 7221, or determined in a court proceeding are not eligible for relief.