IRS Provides Late Filing Penalty Relief

The Internal Revenue Service will provide late-filing penalty relief to taxpayers who filed late tax returns for tax years 2019 and 2020.

Penalties related to the late payment of taxes in those years will remain in effect. Full details on the program can be found here.

Relief will occur automatically and without the need for taxpayers to do anything other than make sure that returns for those years are filed no later than September 30, 2022. Covered under this relief program are most Forms 1040 and 1120 series returns as well as Forms 1041, 1065, 1066, 990-T and 990-PF. International information returns (IIRs) attached to these tax returns and assessed a penalty a filing (including Forms 5471, 5472, 3520, and 3520-A) also are eligible for relief.

Filers of tax year 2019 information returns (other than IIRs) filed on or before August 3, 2020, “will have any portion of an information return penalty that is the result of late filing abated. Information reporting penalties assessed for reasons other than lateness, such as incorrect information or non-compliance with e-file requirements, will not be waived.”

Penalties resulting from fraud, incorporated into an acceptance offer in compromise, an IRS closing agreement, or a judicial order, are not part of the relief program. First time abatement and reasonable cause will not be impacted by this program.

Refunds of previously applied penalties will first be applied to any outstanding liabilities and any remaining balance will be refunded to the taxpayer via a mailed check for the vast majority of taxpayers, with very limited instances where the refund will be disbursed via direct deposit.