On August 24, 2022, the IRS announced that it will grant an exemption from FTF penalties on the following 2019 and 2020 federal income tax returns:
In addition, registrants of FY2019 disclosure statements (other than IIRs) filed prior to August 3, 2020 will have any portion of an information disclosure penalty that is a result of late filing reduced. Penalties will not be waived for reporting information evaluated for reasons other than delay, such as incorrect information or failure to comply with electronic filing requirements. For tax year 2020 information returns (other than IIR), the same relief applies to returns filed on or before August 2, 2021.
If you are required to file a tax return or IIR for 2019 or 2020 and haven't already, take action now! Taxpayers who file one of these returns before September 30, 2022 will not be subject to late filing penalties. Penalties under IRS relief will be automatically reduced, refunded, or credited, as appropriate, without taxpayers requesting such relief. If you have already submitted and received a bill for an FTF penalty on one or more of the tax returns listed above, it will be reversed, even if you have already applied for the reduction and were denied. If you have already paid the fine, you are entitled to a refund, which will usually be issued in the form of a paper check. However, if you have other federal debts, the payment will be applied first to those debts and then to any remainder issued as payment to you.
This broad exemption from penalty does not apply to:
The Treasury Department and the IRS have determined that this penalty relief will allow the IRS to focus its resources more effectively, as well as provide additional relief to taxpayers affected by the COVID-19 pandemic.
We will update this article as more details become available.