IRS Provides Relief from Certain Late Filing Penalties

Due to the burdens placed on IRS resources by COVID-19, the Service has decided to grant broad relief from certain late filing penalties for 2019 and 2020 tax returns if the returns are filed by September 30, 2022. Newly issued Notice 2022-36 provides that penalties will not be imposed for the late filing of certain returns. If penalties have already been assessed, IRS will abate them. Additionally, if the previously assessed late filing penalties have already been paid, the IRS will refund these amounts.

The relief applies to late filing penalties for the following tax returns:

• Form 1040 (individual income tax)
• Form 1041 (trust and estate income tax)
• Form 1120 (corporation income tax)
• Form 990-PF (private foundation return)
• Form 990-T (exempt organization business income tax return)
• Form 1120S (subchapter S tax return)
• Form 1065 (partnership tax return)
• Certain international information returns

The Notice also waives penalties for certain other information returns for 2019 if the returns were filed by August 1, 2020. Similar relief applies to 2020 information returns, if they were filed by August 1, 2021.

The late filing penalty waiver does NOT apply where the failure to file was fraudulent. Additionally, an otherwise covered penalty agreed to by a taxpayer with the Service as part of an Offer in Compromise is also excluded from this relief provision.

This Notice presents a rare circumstance where the Service is allowing taxpayers to take curative action to prevent a penalty for prior years from applying.

To determine whether this Notice applies to your particular situation, please consult your Marcum tax professional.