IRS Providing Automatic Penalty Relief: 2019 And 2020 Returns

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Written by David Ellis | Posted in IRS Automatic Penalty Relief

DAVID ELLIS - IRS Providing Automatic Penalty Relief: 2019 And 2020 Returns

The IRS has announced that it will provide automatic relief from certain failure to file penalties and information reporting penalties for 2019 and 2020 taxable years. (Notice 2022-36) The IRS will determine whether a taxpayer qualifies and will automatically abate, refund, or credit the taxpayer’s account, as appropriate. No action on the taxpayer’s part is required.

Tax professionals should be ready to answer questions from clients who receive unexpected refund checks and/or IRS notices in the mail informing them of automatic changes to their IRS account.

The purpose of the relief is to allow the IRS to focus more of its resources on clearing its backlog, as well as provide relief to taxpayers affected by the COVID-19 pandemic.

To be eligible for the automatic failure to file penalty relief for the 2019 and 2020 taxable years, eligible entities must have filed their returns by September 30, 2022. The relief applies to:

Individual income tax returns (Form 1040 series);
Fiduciary income tax returns (Form 1041 series);
C corporation income tax returns (Form 1120 series);
S corporation income tax returns (Form 1120-S);
Partnership income tax returns (Form 1065);
REMIC income tax returns (Form 1066);
Exempt organization income tax returns (Form 990 series); and
The following foreign information reporting forms:
- Form 5471;
- Form 5472;
- Form 3520; and
- Form 3520-A.

To be eligible for the automatic information reporting penalty relief for failure to timely file information returns (Forms W-2, 1099, etc.), taxpayers must meet the following criteria:

For the 2019 calendar year, returns must have been filed by August 1, 2020; or
For the 2020 calendar year, returns must have been filed by August 1, 2021.

IRS Notice 2022-36 can be found at:

www.irs.gov/pub/irs-drop/n-22-36.pdf

Have a question? Contact David Ellis, Ellis & Ellis CPAs.

David Ellis

David Ellis is the managing partner of Ellis & Ellis, CPAs, Inc. located in Pasadena, California. He has over 25 years of experience in the practice of Divorce, Trust/Estate, and other family tax matters. He is an advisor in matters pertaining to Trust, Estate, and Corporate Taxation to the Los Angeles County Office of the Public Guardian. The firm also provides other general tax services and IRS representation. He earned his Bachelor’s Degree from the University of Southern California in Communication Arts and Sciences. He is a frequent writer and speaker on various tax subjects, and has provided continuing education services to other CPAs and tax professional in the area of Divorce, Trust, and Estate Taxation. An article that he recently co-authored entitled The Tax Consequences of Dividing Marital Property can be found in the December 2014 issue of Practical Tax Strategies, a national professional tax publication.