Internal Revenue Service will waive late-filing penalties for millions of taxpayers as a response to the pandemic
The Internal Revenue Service said it will help taxpayers who are having trouble because of the pandemic by giving select late-tax filers refunds.
On Wednesday, the IRS sent out a notice saying that most people and businesses who filed certain 2019 or 2020 tax returns late won’t have to pay penalties.
When a federal income tax return is submitted after Tax Day, the failure-to-file penalty is usually 5% per month and up to 25% of the tax that hasn’t been paid.
“The penalty relief issued is yet another way the agency is supporting people during this unprecedented time. This penalty relief will be automatic for people or businesses who qualify,” said IRS Commissioner Chuck Rettig.
According to the Internal Revenue Service, the notice involves $1.2 billion in penalties for nearly 1.6 million people.
Individual tax returns for 2019 or 2020 must be submitted by September 30 to be eligible for late-filing penalty forgiveness, according to the Internal Revenue Service. Taxpayers who have previously paid a penalty will get a refund automatically.
The majority of eligible taxpayers will get their refunds by the end of next month.
As a result of the IRS notice, people and businesses who were supposed to report certain international information returns but didn’t will not have to pay certain late penalties.
The agency hopes that these changes will enable it to resume normal operations in time for the 2023 tax filing season and reduce the backlog of unprocessed tax returns.
