Businesses and people who filed their taxes late in 2019 and 2020, due to the Covid-19 pandemic and the challenges it presented, the IRS has announced a penalty relief program, in an effort to support them.
The 2019 and 2020 late income tax returns must be already filed to the IRS by September 30, 2022, in order to be eligible.
This will help all the taxpayers that where fined with a failure-to-file penalty, which is normally assessed at a 5% rate for each month that goes by, until reaching 25%.
Are businesses eligible for this penalty relief?
Some small businesses and employers are eligible to receive this penalty relief by the IRS, in order to qualify, their 2019 tax return must’ve been filed by August 1, 2020, while their 2020 tax return had to be filed before August 1, 2021.
The IRS is stating that those who’re eligible don’t have to do anything, as they are taking automatic steps towards issuing refunds and tax credits to around 1.6 million taxpayers that had already paid any failure to file penalties from 2019 and 2020.
More than $1.2 billion dollars are expected to be refunded or credited by the IRS before September 30.
Who’s not eligible for this penalty relief?
The IRS states there are some cases where the penalty relief will not be applied, for example:
- Fraudulent returns filed
- If the penalty was assessed as part of an investigation
- Penalties that are part of a closing agreement or compromise
- Court determined penalties