IRS PROVIDES BROAD PENALTY RELIEF FOR SOME 2019, 2020 RETURNS

06 September 2022

The IRS on August 23, 2022, announced it will grant automatic penalty relief for late-file penalties imposed with respect to certain returns required to be filed for the 2019 and 2020 tax years.

Notice 2022-36 provides systemic penalty relief to taxpayers for certain civil penalties related to 2019 and 2020 returns. Penalty relief is automatic, so that eligible taxpayers need not apply for it. If penalties have already been paid, the taxpayer will receive a credit or refund. However, the IRS has not yet announced if or when it will notify eligible taxpayers that it has waived their preexisting penalties pursuant to this announcement.

However, it is critical to note that some of these automatic penalty waivers are available only if a taxpayer files its delinquent returns on or before September 30, 2022. As such, there is a very short window for taxpayers with outstanding reporting obligations to file their delinquent 2019 and 2020 returns and receive this automatic penalty relief. Any penalty relief under these procedures will be credited or refunded as appropriate.

This automatic relief does not apply to penalties assessed under certain IRC sections, or for fraudulent failure to file or when a taxpayer has already settled its late-file penalties via an offer in compromise, a closing agreement or a judicial proceeding.  The AICPA has requested that the IRS extend its penalty relief related to its failure to timely process paperwork during the pandemic.

This chart summarizes the list of returns for which automatic penalty relief is now available.

Please contact any of our tax professionals at FCC for additional information.

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