Penalty Relief for Certain Taxpayers Filing Returns for Taxable Years 2019 and 2020

On August 24, 2022, the IRS announced it will grant automatic penalty relief for late-file penalties imposed on certain tax returns that were required to be filed for the 2019 and 2020 tax years.

These automatic penalty waivers and corresponding relief are available only if a taxpayer files delinquent returns on or before September 30, 2022, a very short window to comply. Any penalty relief will be credited or refunded as appropriate.

This automatic relief does not apply to penalties for fraudulent failure to file or where a taxpayer has already settled late-file penalties with an offer in compromise, closing agreement, or in a judicial proceeding.

So, why is IRS granting this relief? In its notice, the IRS alluded to its current backlog, which requires the agency’s immediate attention, as well as relief for those impacted by the COVID pandemic.

The relief applies to late filing penalties for the following tax returns:
• Form 1040 – Individual Income Tax
• Form 1041 – Trust and Estate Income Tax
• Form 1120 – Corporation Income Tax
• Form 990-PF – Private Foundation Return
• Form 990-T (Exempt Organization Business Income Tax Return)
• Form 1120S (Subchapter S Tax Return)
• Form 1065 (Partnership Tax Return)
• Form 3520 – Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts
• Form 5471 – Information Return of U.S. Persons With Respect To Certain Foreign Corporations
• Form 5472 – Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business

Note: If penalties have already been assessed, the IRS will abate them. Additionally, if the previously assessed late filing penalties have been paid the IRS will provide a refund.

The Notice also waives penalties for certain other information returns for 2019 if the returns were filed by August 1, 2020. Similar relief applies to 2020 information returns if they were filed by August 1, 2021.

Please contact Fiske & Company’s expert tax professionals to see if you qualify for Late File Tax Penalty Abatement. Don’t delay! September 30th is just around the corner.

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