IRS to Provide Penalty Relief- August 24, 2022

The IRS has announced, in Notice 2022-36, that it will provide relief to taxpayers from failure to file penalties for specified tax returns for 2019 and 2020 which are filed on or before September 30, 2022, as well as the penalties for certain information returns which have already been filed.

This relief is being provided in an effort to allow the IRS to focus its resources more effectively on the processing of returns and the backlog of correspondence and to provide further relief to taxpayers as a result of COVID-19.

The IRS will automatically waive and abate the failure to file penalty associated with the late filing of the following 2019 or 2020 tax returns, provided the returns are filed by September 30, 2022:

1.   Forms 1040, 1040-C, 1040-NR-EZ, 1040 (PR), 1040-SR, and 1040-SS;

2.   Forms 1041, 1041-N, and 1041-QFT;

3.   Forms 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-ND,

    1120-PC, 1120-POL, 1120-REITT, 1120-RIC and 1120-SF;

4.   Form 1066; and

5.   Forms 990-PF and 990-T

The penalties for failure to timely file will be abated for the following, when filed by September 30, 2022:

1.   Penalties systemically assessed when Form 5471 is attached to a late filed       Form 1120 or Form 1065;

2.   Late filed Forms 3520 and 3520-A;

3.   Penalties assessed for a late filed Form 1065; and

4.   Penalties assessed for a late filed Form 1120S.

Additionally, the penalty for the late filing of an Information Return, as defined in §6724(d)(1) will be waived and abated for late filed 2019 returns if they were filed by August 1, 2020 and for late filed 2020 returns if they were filed by August 1, 2021.

If penalties were already paid, they will be refunded or credited to the taxpayer.  Penalty abatement will not apply to any penalty for the fraudulent failure to file or the penalty for fraud.

Please see Notice 2022-36 for more details about the penalty relief.