 Internal Revenue Service IRS tax news. COVID tax relief IRS provides broad-based penalty relief for certain 2019 and 2020 returns due to the pandemic, $1.2 billion and penalties being refunded to 1.6 million tax payers. IRS penalty relief. Honestly, the IRS, like Biff the bully from the movie Back to the Future, is like going to stop hitting us in the face and call it penalty relief. I mean, it's like a mobster slightly loosening the vice that they clamped on your left testicle and act like they're doing you a favor. I mean, hey, I'm pretty sure you're the one that put my left testicle and the vice in the first place. Acting like you're the good guy here, I mean, it's ridiculous. I think Biff and the IRS have realized that their continual blows to taxpayers' head have actually reduced their overall lunch money proceeds. It's almost like people need to use their noggin somehow to make the money like in the first place. Until this revelation, Biff and the IRS always thought that money just grew on trees that like taxpayers had in their backyard. But I mean, honestly, even if that were true, somebody has to water the tree, take care of it. I mean, the IRS is always trying to kill the golden goose. That's right, Phil. I, the taxpayer, am that golden goose. What's that, Phil? You didn't think I agreed with the idea that dude goose's could lay eggs golden or otherwise? Well, I don't think dudes can lay eggs, Phil. It's I mean, it's just a metaphor. Lay golden egg. I totally like laid the beautiful goose sets who laid the golden egg. I don't know, Phil. Whatever, shut up. You're messing up my thing. A dude goose is a gander, really, Phil? Man, that goose and gander scene makes way more sense now. But first, an attempt at a joke. Some people like traveling down memory lane. We need to take the treacherous journey down memory lane. But my memory, it's more like a memory highway. Here we go. Memory lane is traffic zooming at all hours of the night with convoys of Mack trucks crashing into the side of my skull. Stevens, what is that smell? Well, I'm trying to sleep. Mary, I'm trying to sleep. Honestly, I specifically requested an apartment away from the highway. Oh, great. I specifically asked not to be seated next to a baby. I are 2022-155 August 24, 2022, Washington to help struggling taxpayers affected by the COVID-19 pandemic. The Internal Revenue Service today issued notice 2022-36. There's a link to that here, which provides penalty relief to most people and businesses who file certain 2019 or 2020 returns late. Now, this is kind of an interesting penalty relief here, because you can see in the wording, they kind of make it sound like, as if this is another stimulus payment that they're paying out all this money, but they're only paying it out to certain in certain circumstances. And they're actually paying it out to people who filed late. So they didn't actually comply with the law. So that might be good or beneficial to some people or not. But it seems like it kind of incentivizes or it's benefiting the people that didn't file on time, which you could think is a good thing or a bad thing. It's kind of an interesting situation in the case. The IRS is also taking an additional step to help those who paid these penalties already. So if they're going to remove a penalty, then the question is going to be, well, if you have not yet paid the penalty, they can basically automatically apply that, you would think. But if you already paid the penalty and they're going to remove it, they're going to have to pay you back the penalty. So nearly 1.6 million taxpayers will automatically receive more than $1.2 billion in refunds or credits. And I think this looks to me in my kind of cynical mind these days, because I think I have some reason to be a little bit cynical. It looks to me like this step might have been done just so they can put this out there, which looks kind of like another stimulus payment. Right? They're able to say we were, we sent out nearly 1.6 million taxpayers, 1.2 billion in refunds. But really they're sending out those for penalties that they removed the penalties. It's not like a stimulus payment to anyone and the people that are getting those are actually the people that were not in compliance with filing on time. So again, it could be a good thing, but it seems a little bit in any case. Many of these payments will be completed by the end of September, besides providing relief to both individuals and businesses impacted by the pandemic. This step is designed to allow the IRS to focus its resources on processing backlog, tax return and taxpayer correspondence to help return to normal operations for 2023 filing season. Again, I'm not exactly sure how this helps that helps them focus more on this, right? But clearly they do need to focus more on getting the law back in place because the tax law has changed a lot in the last couple of years. That's not how the tax law is usually designed, because we like to have certainty in the law, whether you're a business or an individual, it should be, we should be able to predict what's going to happen in the future. Uncertainty usually leads to not being able to plan, which leads to bad business decisions and individual decisions. So hopefully they're going to be able to get back on track with some kind of consistency. They also had backlogs on the tax returns, due in part to the changes in the tax code and in the fact that that they had the pandemic social distancing, which was applied kind of from a top-down perspective. So IRS got hit with the social distancing. So you would think they got a big backlog, they do have a big backlog in particular of the paper tax returns, which you would need someone to physically look at in order to process them. So I think they hired a bunch more people in the last bill that was passed. So again, I'm not sure if I completely like what the last bill or anything either, but hopefully they got more people that can at least get the tax returns back in order. Quote, throughout the pandemic, the IRS has worked hard to support the nation and provide relief to people in many different ways. End quote, said IRS Commissioner Chuck Reddick. Quote, 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 to qualify. There's no need to call in quote. So whatever if you qualify for it, they should be able to process it and take care of it automatically without any action on your behalf for the most part. The relief applies to the failure to file penalties. So we have a failure to file penalty. So again, this is actually again, it's not it's not a stimulus payment going out to everybody. They're actually benefiting people who didn't comply. They didn't they didn't file for whatever reason. So it might be a good thing or a bad thing, but it's kind of an interesting step. The penalty is typically assessed at a rate of 5% per month and up to 25% of the unpaid tax when a federal income tax return is filed late. This relief applies to forms in both the Form 1040 and 1120 series, as well as others listed in notice 2022-36 posted today on IRS.gov. To qualify for this relief, any eligible income tax return must be filed on or before September 30th, 2022. In addition, the IRS is providing penalty relief to banks, employers and other businesses required to file various information returns, such as those in the 1099 series. To qualify for relief, the notice states that eligible 2019 returns must have been filed by August 1st, 2020 and eligible 2020 returns must have been filed by August 1st, 2021, because both of these deadlines fell on a weekend, a 2019 return will still be considered timely for purposes of relief provided under the notice if it was filed by August 3rd, 2020, and a 2020 return will be considered timely for purposes of this relief provided under the notice if it was filed by August 2nd, 2021, the notice provides details on the information returns that are eligible for relief. The notice also provides details on relief for filers of various international information returns, such as those reporting transactions with foreign trusts, receipt of foreign gifts and ownership interests in foreign corporations. To qualify for this relief, any eligible tax return must be filed on or before September 30th, 2022. Relief is automatic. Most of the $2.1 billion in refunds delivered to eligible taxpayers by next month. Penalty relief is automatic. So again, remember, this isn't a stimulus payment because it kind of sounds like they're just sending out checks again, but that's not the case. It would only apply under certain circumstances if you had a penalty that they're relieving. So penalty relief is automatic. This means that eligible taxpayers need not apply for it. If already assessed, penalties will be abated. If already paid, the taxpayer will receive a credit or refund as a result, nearly 1.6 million taxpayers will already paid. The penalty are receiving refunds totaling more than 2.1.2 billion. And again, I think this is the headline that they keep on wanting to repeat, which looks like a stimulus payment kind of, right? They're trying to say we're giving you money, but really it's only for a specific relief of these penalties, situation for people that actually didn't comply with the thing. OK, so most eligible taxpayers will receive their refund by the end of September. Penalty relief is not available in some situations, such as where a fraudulent return was filed, where the penalties are part of an accepted offer in compromise or a closing agreement, or where the penalties were finally determined by a court. For details, you can see notice 2022-36. It's available on IRS.gov, the website. There's a link to here as well. This relief is limited to penalties that the notice specifically states are eligible for relief. Other penalties, such as the failure to pay penalty, are not eligible, but for these ineligible penalties, taxpayers may use existing penalty relief procedures, such as applying for relief under the reasonable cause criteria or the first time abate program. So it's that program. It's kind of like if you've ever like not made your credit card payment on time, for example, and they charge you like a penalty and you call them and you say, hey, look, I've already I've always paid my credit card on time and I messed up, would you abate the penalty? And they often they will because you're a good customer. And so the IRS kind of works in a similar way. So if you have a first time penalty, if the pandemic hits you and you're like, ah, I didn't file, I panicked, I didn't think I could pay the taxes. Maybe maybe that's why I didn't file. Or if you didn't file, that's the penalty that might get abated automatically, but you might have other penalties that don't fall under this, that it's a first time thing because people panic with the pandemic and what not. So you might be able to contact the IRS and and see if you can get basically good behavior penalty relief for that first time penalty, or especially for a one time penalty situation. So for that, you can visit IRS dot gov penalty relief for details there. Quote penalty relief is a complex issue for the IRS to administer and quote Reddick said, quote, we've been working on this initiative for months following concerns we've 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 and quote. So there's links to that stuff here. You can take a look at it in more detail and it'll be a link to this in the description.