About 1.6 million individuals and businesses who were fined for filing their tax or information returns late for 2019 and 2020 will get refunds totaling $1.2 billion from the IRS after the COVID pandemic led to a backlog of unprocessed returns at the agency.
The penalty relief was outlined in an IRS notice issued Wednesday, which said the money will be "automatically abated, refunded, or credited, as appropriate without any need for taxpayers to request this relief."
The agency also said many of the payments will be completed by the end of September, and penalties will be abated for people who haven't paid any fines yet, reports Politico.
Taxpayers, though, must file returns still outstanding for the 2019 and 2020 tax years by Sept. 30 to qualify. Businesses filing information returns have other deadlines to meet.
The refunds won't be allowed for taxpayers who have accepted an agreement in cases where penalties were determined by a court, and the fines for failing to pay taxes won't be automatically refunded.
"Penalty relief is a complex issue for the IRS to administer," IRS Commissioner Chuck Rettig said in a statement. "We’ve been working on this initiative for months following concerns we’ve heard from taxpayers, the tax community, and others, including Congress. This is another major step to help taxpayers, and we encourage those affected by this to review the guidelines."
The refund decision is also "designed to allow the IRS to focus its resources on processing backlogged tax returns and taxpayer correspondence to help return to normal operations for the 2023 filing season," the agency's statement said.
The penalty refund decision comes after members of Congress from both parties have been pushing the IRS to provide more pandemic-related relief to taxpayers, and to clear away the backlog of paperwork and returns that happened when the agency closed offices due to the pandemic and sent workers to work remotely.
Sandy Fitzgerald ✉
Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics.
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