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IRS Provides Dramatic Penalty Relief

September 1, 2022

On Aug. 24, 2022, the IRS released Notice 2022-36 providing automatic relief from failure to file penalties for the 2019 and 2020 tax years for a significant number of individuals and businesses that were late in filing their 2019-2020 tax returns.

Relief is provided for failure to file penalties generally applied to late-filed returns on certain forms, if they are filed by Sept. 30, including:

The Relief is Automatic

Qualifying taxpayers are automatically granted the penalty abatement and no action is required by or on behalf of affected taxpayers. Taxpayers that have previously paid the applicable penalty will have that amount refunded or credited with no need from the taxpayer to request such action.  

The IRS is scheduled to begin mailing out boilerplate notices over the next three months to taxpayers that will receive a refund or credit.

Filing Penalties Waived for Forms 1099 and W-2 if filed by Aug. 1, 2020 and 2021

Some late filing penalties for information returns, such as forms 1099 and W-2 for the 2019 and 2020 tax years, are also waived if they were filed by Aug. 1, 2020, and Aug. 1, 2021, respectively. 

Relief Not Provided for Other Penalties or Other Forms

Some forms are conspicuously missing from the list of forms getting penalty relief, such as:

Furthermore, the relief does not apply to other penalties, such as failure to pay or estimated tax penalties.

Any fraudulently filed returns are excluded from the relief granted by Notice 2022-36, as are any penalties accepted in an offer in compromise entered into with the IRS.

For specific details, see this blog post by the National Taxpayer Advocate Services. Please contact your Miller Canfield attorney for help if you receive a letter from the IRS assessing a penalty for the 2019 and 2020 tax years or do not timely receive penalty abatement.