IRS data reveals that in any given year, about one in four taxpayers wait until the last two weeks before the tax deadline to get started on processing their taxes. Considering that the tail end of 2019 and the entire year of 2020 was filled with chaos and uncertainty, it’s no surprise that a huge number of Americans waited until the last minute to file, were given extensions, and then ended up being late with their returns.
In sum, these late filers were collectively charged over $1.2 billion in late fees and penalties.
If you are among the Americans that paid these late fees, you’ll be interested in the latest IRS tax refund pandemic relief program. It’s set to release millions, if not billions, in funds back to taxpayers who were subject to late fees and penalties in 2020.
Learn everything you need to know about this latest program below.
What You Need to Know About the 2019 and 2020 Tax Refund Pandemic Relief Program
According to IRS data, about 1.6 million taxpayers were subject to late fees, penalties, and interest fees after filing their taxes late or failing to file their taxes altogether for the years 2019 and 2020. Altogether, these IRS penalties amounted to over $1.2 billion.
The IRS recently issued Notice 2022-36, which will help provide penalty relief to those taxpayers. Eligible taxpayers include individuals, banks, employers, and other businesses who were charged a Failure to File Penalty for 2019 or 2020.
Taxpayers who haven’t yet paid off their fees will find their overall tax debt burden reduced because those overdue penalties will be abated. If you have already paid off these fees, you will receive a refund or credit from the IRS by the end of September.
Why the IRS Is Issuing a Federal Income Tax Refund for Late Filers in 2019 and 2020
You might be wondering what prompted the IRS to issue this new federal income tax refund relief. According to the IRS, this effort serves multiple purposes. For one, it provides much-needed financial assistance to families and individuals who either owe the IRS a significant amount or paid the IRS money that could’ve gone elsewhere. Considering the pandemic has wreaked havoc on most people’s finances, this effort isn’t going unnoticed.
This move will also help the IRS process a massive backlog of tax returns. Since 2020, the IRS has handled multiple stimulus checks, complicated tax situations, extensions, and a plethora of other issues. The agency hopes this recent move will help them return to normal operations for the 2023 tax season.
How Long Does it Take the IRS to Process a Refund?
Are you wondering how to waive a penalty with IRS late filing? Did you already pay off your penalties or late fees? If so, then we have good news! This new pandemic relief is automatic. That means you will not need to apply for the program, contact the IRS, or take any further action to benefit from the relief efforts.
We’ve got more good news: It won’t take long for the IRS to sort all this out. The agency hopes to have most eligible taxpayers paid by the end of September. It may take an extra month or so to ensure that everyone gets what they’re owed, though.
How to Contact the IRS About Your Refund
Have you still not seen any refund or credit towards your tax penalties or fees? If so, it might be a good idea to contact the IRS about your refund. You can talk to an IRS agent directly by calling (800) 829-1040 during business hours.
Consequences of Filing Your Taxes Late in 2022
Have you missed the tax deadline for 2022? Did you fail to ask for an extension? If so, you could get hit with a new Failure to File Penalty. This penalty amounts to 5% of any unpaid tax and is charged for every month you’re late on your taxes. You can get charged up to 25% of your total unpaid tax bill. These penalties will collect interest, too.
A tax refund late filing could cause other problems, too. The consequences of not filing or paying state taxes could lead to wage garnishment, tax liens, or even criminal charges.
Will the IRS Waive a Penalty for Late Filing This Year or in the Future?
Considering that the IRS is issuing widespread and automatic penalty relief, you might not be considering the consequences of filing your taxes late this year. It’s crucial to understand that this pandemic relief is out of the ordinary. It’s very unlikely that the IRS will ever waive these types of penalties, fees, and interest payments in the future for years other than 2019 and 2020.
With that in mind, it’s important to rectify your tax situation if you haven’t yet filed your taxes for 2022. You need to know the tax extension deadlines for 2022, and you need to adhere to them or run the risk of experiencing collection efforts from the IRS or your state tax agency.
Do You Have More IRS Tax Refund Questions?
The latest IRS tax refund pandemic relief program is set to give back millions of dollars to American taxpayers who struggled throughout 2020. While most Americans focused on surviving, some may have experienced compounding interest and fees from failing to file their taxes or from filing them late.
Considering we were all going through an unprecedented worldwide pandemic, it makes sense to be a little lenient on those Americans who paid late fees, interest, and other penalties to the IRS at the time. It’s important for taxpayers to understand, though, that this type of relief is not common, and it’s unlikely to be implemented for any future years.
Do you have more questions about your tax return from 2019 or 2020? Are you currently struggling with this year’s tax return? If so, Tax Group Center is here to help. Fill out our online contact form now to hear back from one of our agents.