IRS Forgives Penalties For Millions Of Taxpayers Who Filed Late—Here’s Who Qualifies

The IRS will waive and refunds penalties for Americans who filed their tax returns late, as the agency struggles with a massive Covid-imposed back-up that has frustrated taxpayers and politicians.

The relief program will wipe away two years' worth of "failure to file" penalties, which usually require taxpayers who miss the IRS's filing deadline to pay up to 25% of their total outstanding tax bills.

The agency said that almost 1.6 million taxpayers will get refunds by the end of the month because they failed to file their taxes.

To be eligible for the penalty relief program, people need to file their tax returns by the September 30th deadline.

The IRS is waiving late penalties for businesses and people who have to report international transactions.

The program doesn't apply to "failure to pay" penalties, which are imposed on Americans who didn't pay their taxes on time, and doesn't cover penalties for fraudulent tax returns.

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The IRS says it will be able to focus its resources on processing backlogged tax returns. Staffing shortages, aging technology, and the added burden of sending out multiple rounds of Covid-19Stimulus checks to hundreds of millions of Americans have stretched the agency thin. Scores of tax returns and other paper documents have piled up in federal offices and many taxpayers have difficulty reaching IRS staff over the phone. The National Taxpayer Advocate, the IRS's internal watchdog, said that the IRS was taking longer to process 21.3 million paper returns than it did a year ago. The IRS was urged by members of Congress to give relief to Americans who were hit with penalties during the Pandemic.

The Inflation Reduction Act, a climate, healthcare and tax bill passed by Democrats and signed by President Joe Biden earlier this month, includes $78.6 billion in extra funding for the IRS over the next ten years. Much of that funding will be used to ramp up enforcement for nonpayment of taxes, but the bill also allocates billions of dollars for the IRS to upgrade its technology

The IRS needs $80 billion. Look at the food. The Washington Post has an article about it.