The average refund of no-show penalties will be around $ 750, according to the IRS.
If you have submitted your return late and are therefore entitled to a refund of the penalty, you do not need to do anything. The IRS has started sending payments automatically. The agency said nearly 1.6 million taxpayers are expected to receive refunds or credits.
“So it is certainly possible that a given taxpayer will receive two refunds if they have filed both a 2019 and 2020 declaration late,” said IRS spokesman Eric Smith.
Taxpayers normally pay a penalty of 5% per month, up to 25% of the unpaid tax, when a federal filing is overdue.
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But many people and companies may have missed the submission deadline for 2019 and 2020 due to pandemic-related issues. The businesses were closed, delaying taxpayers from obtaining the information they should have submitted. People may have been too sick to bother filing their statements. Many paid and free tax preparation services have been curtailed.
“At the same time, the IRS was virtually unreachable by phone, while a backlog of raw paper returns and correspondence that began in 2020 continued to grow,” national tax attorney Erin M. Collins said in a blog post. . “Many taxpayers, through no fault of their own, and sometimes even when they submitted promptly, were subject to penalties for late submission.”
The IRS has $ 80 billion coming up. It should be spent on answering the phone.
Forgiveness of the penalty can be significant, Collins said. Let’s say you owe the IRS $ 10,000. Show up late and the penalty is $ 500 per month, up to a maximum of $ 2,500.
If you haven’t filed your 2019 and / or 2020 declarations yet, you’ll need to move fast. This pardon is a one-time offer. You only have until September 30th to receive your returns archived or mailed. However, I highly recommend that you archive electronically. The IRS is still working with a huge backlog of returns received this year – 8.2 million as of August 26.
Most eligible taxpayers are expected to receive refunds by the end of September. But Collins warns that the sheer number of checks to be written means that some refunds may take longer.
Why does the IRS need $ 80 billion? Just look at his coffee shop.
Other penalties, such as non-payment, are not eligible under the program. If you think you have a good reason not to file on time or pay late for other tax years, the IRS has other relief programs. You can find the details at irs.gov/penaltyrelief.
Considering all the problems the IRS has faced since the start of the pandemic, there is a high possibility that sending $ 1.2 billion in refunds will not go as planned.
“Given the large scale of the program, it would be unreasonable to expect the IRS to encounter no unexpected speed hurdles along the way,” Collins said.
So, here are some pointers from the taxpayer attorney’s office.
– Look for a notice. The IRS will mail the same notices it normally sends when issuing a refund or applying a refund to a taxpayer account. Unfortunately, the alerts won’t explain that you’re getting the money back as part of this relief program, Collins said. However, you will see that the no-show penalty has been eliminated or used to offset any money you may still owe the IRS.
– Make sure the IRS has your current address. The IRS notice and any refund check will be sent to the last known address. Now, here’s where you’ll need to pack your patience. The call may not help with this. There are still delays in reaching real-time support at the IRS. You can notify the post office serving your old address that you have moved, but not all post offices forward government checks. Then you will also need to let the IRS know that your address has changed.
You can use Form 8822 to notify the agency of a change to your home mailing address. Typically, it takes four to six weeks to process a change of address. But these are not typical times.
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– Separated or divorced joint custodians may have some problems. For joint declarations filed in 2019 and / or 2020, reimbursement checks will be issued in the name of both taxpayers but will be mailed to the current address of the person whose name and social security number are listed first on the declaration, has Collins said. There is no need to imagine how this could go sideways if the check is sent to only one spouse when both are eligible for a refund.
– Check your IRS account online. This would be a good time to establish an online IRS account to check if you are receiving a penalty discount. Go to irs.gov and click the “Sign in to your account online” link. By the way, you cannot use the online account to update your address.
Collins says if you don’t see your refund or have a problem, wait until after November 30 before contacting the IRS for assistance at (800) 829-1040. As the agency is still up to date with raw returns, employees may need time to process penalty refunds.
The return of money to the people could be a welcome financial relief with consumer prices still high and interest rates set to rise as the Federal Reserve continues its efforts to lower the US inflation rate.