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IRS Offers Penalty Relief for Late Filers: What You Need to Know

August 25, 2022

Attention taxpayers…have you not yet filed your 2019 or 2020 returns? Due to ongoing pandemic disruption, the IRS has issued Notice 2022-36, which provides penalty relief to most people and businesses who file returns late. Let’s dive in.

On August 23rd, the IRS has announced that commencing August 25, 2022, automatic relief would be available for failure-to-file and international information return penalties relating to 2019 and 2020 tax returns.

Who is Eligible for Relief?

Individual taxpayers who have not filed for 2019 and 2020 or certain 2019 returns that were filed on or before August 1, 2020, and 2020 returns that were filed on or before August 1, 2021.

Business taxpayers that have fiscal years beginning 2019 and 2020 will also be eligible for relief.

Forms Eligible for Relief:

  • Federal Returns: Most Form 1040, 1041, and 1120 series returns, Forms 1065, 1066, 990-T, and 990-PF.
  • International Information Returns: Form 5471, 5472, 3520 and 3520-A.

When to file?

For the relief to be granted the eligible 2019 and 2020 tax returns and international informational returns must be filed by September 30, 2022.

Failure to File Penalties

Failure to file penalties are imposed on returns submitted after the due date (including extended due dates). The penalty starts at 5% of the tax liability for each month the return is late for a maximum of 25%. Failure to file penalties alongside the failure to file information returns can prove to be very costly to a taxpayer.

The penalties “will be automatically abated, refunded, or credited, as appropriate without any need for taxpayers to request this relief” per the notice. It is important to note that the relief is only available for failure to file, no guidance or notice has been posted pertaining to relief on failure to pay by the tax due date(s).

If you have any questions or concerns relating to your filing requirement? Reach out to us, we would be happy to help.

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