IRS Delivers Penalty Relief to Individual and Business Taxpayers

Written by Adam Repasy, CPA on August 30, 2022

On August 24, 2022, the IRS issued Notice 2022-36 which grants penalty relief for income tax and information returns for tax years 2019 and 2020.

Citing the COVID-19 pandemic, postponement of multiple tax deadlines and the administration of economic impact payments, the IRS believes that such relief will allow it to better focus its strained resources and provide relief to taxpayers.

Failure to file penalties (aka late filing penalties) will not be imposed by the IRS for specified tax returns for taxable years 2019 and 2020 that are filed on or before September 30, 2022.

Specified income tax returns available for this automatic relief include:

  • Form 1040, U.S. Individual Income Tax Return
  • Form 1040-NR, U.S. Nonresident Alien Income Tax Return
  • Form 1041, U.S. Income Tax Return for Estates and Trusts
  • Form 1120, U.S. Corporation Income Tax Return
  • Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation
  • Form 990-T, Exempt Organization Business Income Tax Return (and Proxy Tax Under Section 6033(e))

Specified information tax returns available for this automatic relief include:

  • Form 1065, U.S. Return of Partnership Income
  • Form 1120-S, U.S. Income Tax Return for an S Corporation
  • Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, and/or Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, is attached to a late-filed Form 1120 or Form 1065
  • Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, and on Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner (Under Section 6048(b))
  • 2019 information returns (such as returns in the 1099 series) that were filed on or before August 1, 2020
  • 2020 information returns (such as returns in the 1099 series) that were filed on or before August 1, 2021

Even though this relief is broad, there are exceptions to this penalty relief, including forms not listed in the notice, fraudulent filings or late payment of tax.

Connect with an Advisor

If you have questions about how these provisions impact your business, please contact your Warren Averett advisor directly for assistance, or have a member of our team reach out to you.

This article reflects our views at the time this article was written and should be used as reference only.

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