In their effort to help struggling taxpayers affected by the COVID-19 pandemic, the IRS issued Notice 2022-36, providing penalty relief to most people and businesses who file certain 2019 or 2020 returns late.
To help those who already paid their penalties, the IRS is also taking an additional step. They will return more than $1.2 billion in refunds or credits to nearly 1.6 million taxpayers.
The penalty relief will be automatic for people or businesses who qualify. And according to the IRS, there’s no need to call.
The relief applies to the failure to file penalty, which is normally assessed at a rate of 5% per month, up to 25% of the unpaid tax. It applies to forms in both the Form 1040 and 1120 series and others listed in Notice 2022-36, posted on IRS.gov.
These steps will also allow the IRS to focus on processing backlogged tax returns and taxpayer correspondence.