In case you missed the deadline for 2019 or 2020 tax returns, chances are you’ll receive a refund for late-filing penalties. But it’s essential to file overdue returns by Sept. 30 to qualify.
The IRS will shell out greater than $1.2 billion in collective refunds or credits to just about 1.6 million late filers, in accordance with the federal agency.
Many individuals and small businesses will receive automatic payments by the tip of September, the IRS said.
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“Throughout the pandemic, the IRS has worked hard to support the nation and supply relief to people in many various ways,” said IRS Commissioner Chuck Rettig.
The waiver applies to the agency’s late-filing penalty of 5% of your unpaid balance monthly, capped at 25%. Late-payment penalties of 0.5% monthly should apply.
Eligible tax returns include individual, corporate, estates and trusts, and more, in accordance with an IRS notice.
IRS penalty relief is ‘very welcome,’ tax pros say
The announcement comes because the IRS faces ongoing criticism for a backlog of unprocessed tax returns, despite guarantees from Rettig that the pileup will “absolutely” resolve before December.
As of Aug. 26, there have been 8.2 million unprocessed individual returns filed in 2022, in accordance with the IRS, including 6.5 million paper filings.
This relief is “very welcome,” said Albert Campo, a CPA and president of AJC Accounting Services in Manalapan, Recent Jersey.
Covid-19 has “greatly impacted” the agency’s ability to process paper, Campo said, and missing returns have triggered notices, further adding to the pileup when filers respond.
“With this broad relief, the burden on taxpayers, tax professionals and IRS staff must be alleviated to some extent,” he said.
The IRS has been “working aggressively” to process backlogged returns and taxpayer correspondence, aiming to return to “normal operations” for the 2023 filing season, in accordance with the notice. The penalty relief will allow the agency to “focus its resources more effectively,” the IRS said.