IRS refunds $1.2B: Who is eligible and when the payment will happen

Some taxpayers will see a boost to their bank accounts soon — the IRS has announced it will refund $1.2 billion in tax filing penalties.

Nearly 1.6 million people will automatically get a refund after filing 2019 or 2020 returns late, according to the IRS.

Others, however, must act quickly to take advantage of the program. To qualify, you must file an eligible income tax return on or by September 30, 2022.

The refund is to compensate for the failure to file penalty, which the IRS says is assessed at 5% per month, up to 25% of the tax not paid when the federal income tax return is filed.

Who is eligible?

Americans who file forms in the 1040 and 1120 series, or forms listed here news releaseare eligible as long as they file a late 2019 or 2020 return by the September deadline.

Along with individuals, the IRS also offers relief to banks, employers and other businesses that file information as in the 1099 series. In that case, eligible 2019 returns must be filed by August 1, 2020, and 2020 returns by August 1, 2021.

Taxpayers who file various international returns, such as those reporting transactions with foreign trusts, receiving foreign gifts or ownership interests in foreign corporations are also included in the Full guidelines from the IRS. Qualifying international forms must also be submitted on or before September 30, 2022.

Those who have paid the penalty will get a refund, while those who have been fined but have not paid will see their fines dismissed.

When will the refund be made?

For the nearly 1.6 million people who have already paid penalties and will be automatically reimbursed, the IRS said they will issue refunds by the end of September.

Some people will be disqualified, however, and will not see a payment – fraudulent returns, levied penalties as part of a compromise or closing arguments and court ordered penalties are all exempted.

“Penalty relief is a complex issue for the IRS to deal with,” said IRS Commissioner Chuck Rettig. “We have been working on this initiative for several months following the problems we have heard from taxpayers, the tax community and others, including Congress. This is another major step to help taxpayers, and we encourage people affected by this to review the guidelines.”

Other penalties, such as failure to pay a penalty, will not be reinstated. You can see the full list Here you go.

Why does the IRS do this?

The IRS said the $1.2 billion in refunds will help “struggling taxpayers” affected by the COVID-19 pandemic.

“Throughout the pandemic, the IRS has been working hard to support the nation and provide relief to people in many ways,” Rettig said. “The penalty relief issued today is another way the agency is supporting people during this unprecedented time.

The IRS also stated that the large relief measure will help tax collection agencies “focus their resources on processing backlogged tax returns and taxpayer correspondence to support normal operations for the 2023 filing season.”

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