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Bonus Tax Refund From the IRS

Oct 01, 2023 By Triston Martin

When the coronavirus pandemic struck in 2020, it threw the annual tax filing season into disarray for taxpayers and tax experts. Last week, Internal Revenue Service (IRS) announced that it would refund more than $1.2 billion in late filing penalties for returns due in 2020 and 2021. This refund applies to tax returns submitted for the years 2019 and 2020. According to Internal Revenue Service, refunds should start arriving by the end of September.

"The IRS commissioner, Chuck Rettig, said in a press release that the penalty reduction that was provided today is another another way the agency is aiding individuals at this exceptional time. It is not necessary to make a phone call in order to get this penalty reduction; it will be applied automatically to any individuals or companies who qualify."

Although Internal Revenue Service (IRS) is marketing penalty reductions as a tool to assist citizens of the United States, tax experts believe the agency may have another agenda in mind. Candace Varner says that Internal Revenue Service needs to catch up on all of its mail. "The IRS is so behind in all of their correspondence." The removal of these fines for late submission might contribute to the completion of part of the backlog.

Regardless of the motivation, a bonus refund of this amount will be sent to 1.6 million taxpayers in the next month. By following these instructions, determine whether you are eligible to get part of this cash from Internal Revenue Service.

What Types of Late Fees Are Being Refunded?

Those who submitted some tax forms late for 2019 and 2020 are eligible for "penalty relief" from Internal Revenue Service (IRS). Forms for these years were to be sent in by the appropriate dates in 2020 and 2021. The following late filing fees for the forms used in those years will either be reimbursed to you or waived entirely:

  • Income tax forms for individuals, businesses, and estates are available, some of which are Form 1040, Form 1120, Form 1065, and Form 990.
  • Filing information returns, such as 1099 forms, is obligatory for some companies.
  • Businesses must submit their 1099 forms by the deadline of August 1, 2020, for 2019 tax returns, or August 2, 2021, for 2020 tax returns to be eligible for penalty reduction for late 1099 forms.

Despite this, there is still time for individuals and companies to complete their income tax forms to avoid penalties for filing them late. Michael Greenwald, a partner and the corporate tax head at Friedman LLP in New York City adds that taxpayers won't be subject to any fines as long as their returns are submitted by the end of September (2022) or earlier.

This refund only applies to the late filing penalty, which may be as high as 25 percent of any other federal tax owed. This refund does not apply to any other fees that have been paid. According to Logan Allec, a certified public accountant and the proprietor of the tax relief firm Choice Tax Relief, "The failure to pay penalties is not being pardoned."

How Do I Receive My Refund?

The procedure for the refund will be carried out mechanically. According to Greenwald, "the IRS would prefer it if you did not call them." Those who have been given qualifying filing late penalty but have not paid it will have it alleviated. Those who have not filed their tax returns on time are subject to the penalty. According to Internal Revenue Service (IRS), those individuals who have paid the required charge should have their refund refunded by the end of September.

The IRS did not say how it plans to disperse these refunds, although direct transfers have been made for other programs like the advance child tax credit when the IRS has a taxpayer's account information, as reported by Varner. However, the IRS needs to be more active on how exactly taxpayers might expect to get their refunds.

What Happens If I'm Not Eligible for a Refund of the Late-Filing Penalty?

A taxpayer may not be entitled to a refund in some circumstances. These scenarios include situations in which a false return was submitted, or the penalty was included in a tax settlement offer. In addition to this, the late-filing penalty will not be waived for the tax years 2019 and 2020. You may be required to pay the penalty even though you still need to submit your tax return for 2021, especially if you filed your return for the prior year late or did not request an extension this year.

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