IRS Penalty Relief for Some 2019–2020 Returns Filed Late Due to COVID-19

On August 24, 2022, the IRS issued Notice 2022-36 providing failure-to-file penalty relief to taxpayers who filed certain 2019 or 2020 returns late. The relief applies to Forms 1040, 1041, 1065, 1120, and 1120S, including most related series forms, as well as certain informational returns.

The IRS estimates that nearly 1.6 million taxpayers will receive more than $1.2 billion worth of penalty relief.

 How to Receive Penalty Relief

Taxpayers who filed their 2019 and 2020 returns late will automatically receive refunds of paid failure-to-file penalties. The IRS indicated that taxpayers who already paid a penalty covered under this notice will receive a refund or credit by September 30, 2022.

Taxpayers who haven’t yet filed their 2019 or 2020 returns must file by September 30, 2022, to qualify for penalty relief. Business taxpayers with a fiscal year end will likewise be eligible for relief for their fiscal tax years beginning in 2019 and 2020.

Specific Exclusions from Penalty Relief

The notice does not provide relief for any penalties in the following instances:

  • Failure to pay
  • Fraudulent failure to file
  • Accepted offers in compromise
  • Determinations in a closing agreement or court
  • Other circumstances not specifically listed in Notice 2022-36

Information Returns

The notice abates penalties for failure to timely file information returns, including those in the Form 1099 series, for 2019 and 2020 tax years. To be eligible, information returns for 2019 must have been filed on or before August 3, 2020, and information returns for 2020 must have been filed by August 2, 2021.

International Information Returns

Various international information returns will receive similar relief, including penalties systematically assessed when a Form 5471 or Form 5472 is attached to a late Form 1120 or Form 1065.

For a complete listing of the penalties included in the relief, see Notice 2022-36.

We’re Here to Help

For information regarding the penalty relief, general tax planning, or specific questions regarding COVID-19 tax relief, contact your Moss Adams professional.

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