The IRS announced Wednesday that it will waive penalties for many Americans who filed late tax returns during the pandemic.
Nearly 1.6 million claimants will automatically receive a collective $1.2 billion in penalty refunds or credits, according to the federal agency, with many payments expected to be made by the end of September.
The relief applies to many individuals and businesses that filed late tax returns for 2019 and 2020, the IRS said.
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“Throughout the pandemic, the IRS has worked hard to support the nation and provide relief to people in many different ways,” said IRS Commissioner Chuck Rettig.
“The sanctions relief issued today is one more way the agency is supporting people through this unprecedented time,” he said.
The waiver applies to the agency’s late deposit penalty of 5% of your unpaid balance per month, capped at 25%. Late payment penalties of 0.5% per month may still apply.
Eligible tax returns include individual, corporate, estate and trust returns and others, according to an IRS notice. However, you must file your tax returns by Sept. 30 to qualify, the IRS said.
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Covid-19 has “greatly affected” the agency’s ability to process paper, Campo explained, and missing returns have triggered alerts, further adding to the backlog when filers respond. “With this broad relief, the burden on taxpayers, tax preparers and IRS staff should be eased to some extent,” he said. The IRS is “aggressively working” to process late returns and taxpayer correspondence, with the goal of returning to “normal operations” for the 2023 filing season, according to the release. And the sanctions relief will allow the agency to “focus its resources more effectively,” the agency said.
