The IRS announced that it would automatically waive specific penalties for failure to file (late filing penalty) for tax returns and informational forms for 2019 and 2020 (Notice 2022-36). The IRS will determine whether a taxpayer is eligible and will automatically disallow, refund, or credit the taxpayer’s account, as necessary. Taxpayers do not have to take any action.
The IRS designed this relief to focus more resources on resolving the backlog and providing better customer service to taxpayers affected by the COVID-19 pandemic.
To qualify for automatic relief for their late filing penalty for tax years 2019 and 2020, individuals and corporations must file their tax returns by September 30, 2022. That is if they haven’t already. This notice covers previously filed returns for the years 2019 & 2020. You don’t need to take action to get this refund if the IRS charged you a late filing penalty. The relief applies to:
- Personal income tax return (Form 1040 series);
- Trust Income Tax Return (Form 1041 Series);
- C Corporation Income Tax Return (Form 1120 series);
- S Corporation Income Tax Return (Form 1120-S);
- Partnership income tax return (Form 1065);
- REMIC income tax return (Form 1066);
- Exempt organization income tax return (Form 990 series)
Notice 2022-16 also covers the following informational forms relating to foreign entities. Make sure to check my previous post on this topic. The forms covered are:
- Form 5471 (US person owing shares in a foreign corporation);
- Form 5472 (Non-resident alien/foreign corporation owning shares in a US corporation);
- Form 3520 (US person having an interest in a foreign grantor trust);
- Form 3520-A (filed by the trustee of a foreign trust; a US person receiving gifts from a foreign person would also use this form to report it).
Taxpayers must meet the following criteria to receive automatic reporting penalty relief for failure to file a return (W-2, 1099, etc.) on time:
– For the calendar year 2019, the payor must have submitted the forms by August 1, 2020; or
– For the calendar year 2020, the payor must have submitted the forms by August 1, 2021.
These dates are specifically for the abatement of late filing penalty for tax slips W-2, 1099s.
IRS Notice 2022-36 can be found at: www.irs.gov/pub/irs-drop/n-22-36.pdf
