IRS fee refunds in September: Who qualifies and how to claim them
The tax agency introduced an initiative to repay those who were penalised for late tax returns during the pandemic, either as a refund or an extra credit.
During the pandemic the Internal Revenue Service (IRS) has provided a number of financial relief programs to ease the burden on American households. The agency oversaw the distribution of stimulus checks and the Child Tax Credit expansion, but another lesser-known initiative will write off more than $1 billion in late charges.
Filers who missed the deadline for their 2019 or 2020 tax returns (which were due in 2020 and 2021, respectively) could be eligible for a refund on late-filing penalties. More than $1.2 billion in refunds and credits will be distributed to around 1.6 million filers, the IRS confirmed in a statement.
“Throughout the pandemic, the IRS has worked hard to support the nation and provide relief to people in many different ways,” said IRS Commissioner Chuck Rettig. “The penalty relief issued today is yet another way the agency is supporting people during this unprecedented time. This penalty relief will be automatic for people or businesses who qualify; there’s no need to call.”
Typically the failure to file penalty is assessed at a rate of 5% per month, up to an upper limit of 25% of the unpaid tax.
How can I claim the IRS late charge refund?
The IRS will be making automatic payments to eligible taxpayers so there is no need to claim to get the support. All you have to do is ensure that you have filed the late tax return before 30 September 2022 and you will receive details regarding the relief.
If you have outstanding penalties then they will be wiped from you record; if you had previously paid a fine then it can be reimbursed as a refund or a tax credit.
However there are some limits on eligibility for the late fine refund. Relief is not available to filers who filed their return fraudulently; who accepted an offer as compromise or a closing agreement; or who had a penalty fine determined by the courts.
“Penalty relief is a complex issue for the IRS to administer,” Rettig said. “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 IRS will start making payments during September for those who are eligible and hopes to action all of the refunds in the coming months. The agency is said to be working through the backlog of unprocessed returns that has been present since the start of the pandemic. Back in June Rettig assured lawmakers that the agency was hiring another 10,000 workers to help shift the backlog.