IRS Offers Penalty Relief for Certain Qualifying Taxpayers by Arthur Dichter, JD, LLM

Posted on August 30, 2022 by Arthur Dichter

The IRS recently announced it will provide retroactive penalty relief to taxpayers that failed to file certain tax and information returns on time during the COVID pandemic. To receive this automatic waiver of penalties, domestic and international individuals, businesses, and trusts and estates must file an applicable income tax return on or before Sept. 30, 2022.

The penalty relief provided in IRS Notice 2022-36 is available solely to those taxpayers whose failure to timely file applicable returns for tax years 2019 and 2020 was neither intentional nor fraudulent. Typically, the IRS imposes on reticent taxpayers a monthly failure to file penalty equal to 5 percent of the amount of tax due, up to a maximum penalty of 25 percent of any unpaid tax balance. While late fling penalties will not be applicable, late payment penalties and interest will still apply.

Taxpayers qualifying for this relief include those with the following 2019 and 2020 income tax and information return filing responsibilities:

Additional penalty relief is available to business taxpayers that filed 2019 Form 1099 informational series returns by Aug. 1, 2020, and 2020 information returns by Aug. 1, 2021.

Taxpayers that file relevant 2019 and 2020 returns on or before Sept. 30, 2022, do not have to request relief from the IRS. Rather, the IRS will automatically waive relevant penalties and/or refund to taxpayers penalties previously assessed. All told, the IRS expects to issue more than $1.2 billion in refunds to nearly 1.6 million taxpayers that already paid failure to file penalties.

While the extension of time to file these returns is welcome news, taxpayers should not wait until the last moment to meet these extended deadlines. Taxpayers who need to file delinquent income tax or information returns for 2019 or 2020 should consult with their tax advisors immediately.

About the Author: Arthur Dichter, JD, is the director-in-charge of the International Tax Services practice with Berkowitz Pollack Brant Advisors + CPAs, where he works with multi-national businesses, foreign trusts, and high-net worth foreign individuals to structure their assets and build wealth in compliance with U.S. income, estate and gift tax laws. He can be reached at the firm’s Miami office at (305) 379-7000 or via email at