If you fail to meet the 2019 or 2020 tax return TBEN, you may be subject to a late filing penalty. But you must file delinquent returns by September 30 to be eligible.
The IRS will pay out more than $1.2 billion in collective repayments or credits to nearly 1.6 million late filers, according to the federal agency.
Many individuals and small businesses will receive automatic payments by the end of September, according to the IRS.
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“During the pandemic, the IRS has worked hard to support the nation and help people in many different ways,” said IRS Commissioner Chuck Rettig.
The exemption applies to the late filing penalty of 5% of your unpaid balance per month, up to a maximum of 25%. Late payment penalties of 0.5% per month may still apply.
Eligible tax returns include individual, corporate, estate and trusts, and more, according to an IRS notice.
IRS fine relief is ‘very welcome’, tax professionals say
The announcement comes as the IRS faces ongoing criticism for a backlog of unprocessed tax returns, despite promises from Rettig that the pile-up will be “absolutely” resolved before December.
As of August 26, there were 8.2 million unprocessed individual returns filed by 2022, including 6.5 million paper returns, according to the IRS.
This relief is “very welcome,” said Albert Campo, a CPA and president of AJC Accounting Services in Manalapan, New Jersey.
Covid-19 has had “big impact” on the agency’s ability to handle paper, Campo said, and missing returns have led to notifications, adding to the pile-up as filers respond.
“With this broad relief, the burden on taxpayers, tax professionals and IRS staff should be alleviated to some degree,” he said.
The IRS has “worked aggressively” to process backlogs and taxpayer correspondence, aiming to return to “normal operations” for the 2023 filing season, according to the report. The reduced sentence will allow the agency to “focus its resources more effectively,” according to the IRS.