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How one can declare IRS refund for late-filing charges from 2019 or 2020 returns

Should you missed the deadline for 2019 or 2020 tax returns, chances are you’ll obtain a refund for late-filing penalties. However it’s essential to file overdue returns by Sept. 30 to qualify.

The IRS will shell out greater than $1.2 billion in collective refunds or credit to just about 1.6 million late filers, according to the federal agency.

Many people and small companies will obtain automated funds by the top of September, the IRS mentioned.

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“All through the pandemic, the IRS has labored onerous to assist the nation and supply reduction to folks in many various methods,” mentioned IRS Commissioner Chuck Rettig.

The waiver applies to the company’s late-filing penalty of 5% of your unpaid steadiness per 30 days, capped at 25%. Late-payment penalties of 0.5% per 30 days should apply.

Eligible tax returns embrace particular person, company, estates and trusts, and extra, in keeping with an IRS notice.

IRS penalty reduction is ‘very welcome,’ tax professionals say

The announcement comes because the IRS faces ongoing criticism for a backlog of unprocessed tax returns, regardless of guarantees from Rettig that the pileup will “absolutely” resolve before December.

As of Aug. 26, there have been 8.2 million unprocessed particular person returns filed in 2022, according to the IRS, together with 6.5 million paper filings.

This reduction is “very welcome,” mentioned Albert Campo, a CPA and president of AJC Accounting Companies in Manalapan, New Jersey.

IRS could crackdown on high earners with more audits

Covid-19 has “drastically impacted” the company’s skill to course of paper, Campo mentioned, and lacking returns have triggered notices, additional including to the pileup when filers reply.

“With this broad reduction, the burden on taxpayers, tax professionals and IRS workers needs to be alleviated to some extent,” he mentioned.

The IRS has been “working aggressively” to course of backlogged returns and taxpayer correspondence, aiming to return to “regular operations” for the 2023 submitting season, in keeping with the notice. The penalty reduction will permit the company to “focus its assets extra successfully,” the IRS mentioned.

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