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Federal Penalty Relief for Certain 2019 and 2020 Tax Returns Filed on or Before September 30, 2022

The US Internal Revenue Service (IRS) recently released Notice 2022-36, in which the IRS announced that it is automatically waiving (and automatically abating, refunding, or crediting, as appropriate) penalties for failure to timely file specified tax returns for the 2019 and 2020 tax years that are filed on or before September 30, 2022.

Penalties for failure to make a timely payment of the tax due, as well as interest thereon, are not being waived. In addition to providing relief to both individuals and businesses impacted by the COVID-19 pandemic, the relief in Notice 2022-36 is intended to allow the IRS to focus its resources on processing backlogged tax returns and taxpayer correspondence to help it return to its normal operations for the 2023 filing season.

The most notable penalties and returns within the scope of this relief include penalties for the failure to file individual income tax returns, corporation income tax returns, partnership income tax returns, and estate and trust income tax returns. However, Notice 2022-36 specifically states that relief does not apply to cases of fraud, penalties in an accepted offer in compromise, penalties settled in a closing agreement, or penalties finally determined in a judicial proceeding.

The penalties and returns eligible for relief under Notice 2022-36 include:

1. Additions to tax under Section 6651(a)(1) of the Internal Revenue Code for the failure to file the following income tax returns: 

  • Individual Income Tax Returns (Forms 1040, 1040-C, 1040-NR, 1040-NR-EZ, 1040 (PR), 1040-SR, and 1040-SS);

  • Fiduciary Income Tax Returns (Forms 1041, 1041-N, and 1041-QFT);

  • Corporate Income Tax Returns (Forms 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120-REIT, 1120-RIC, and 1120-SF);

  • Real Estate Mortgage Investment Conduit (REMIC) Income Tax Returns (Forms 1066); and

  • Private Foundation and Exempt Organization Business Income Tax Returns (Forms 990-PF and 990-T).

2. Penalties under Code Sections 6038, 6038A, 6038C, 6039F, and 6677 for failure to timely file the following information returns:

  • Forms 5471, 5472, 3520, and 3520-A.

3. Penalties under Code Section 6698(a)(1) for failure to timely file, and under Code Section 6698(a)(2) for failure to show required information on, Forms 1065 (partnership income tax returns).

4. Penalties under Code Section 6699(a)(1) for failure to timely file, and under Code Section 6699(a)(2) for failure to show required information on, Forms 1120-S (S corporation income tax returns).

5. Penalties under Code Section 6721(a)(2)(A) for failure to timely file the following information returns, as defined in Code Section 6724(d)(1) (e.g., Forms 1099):

  • 2019 information returns that were filed on or before August 1, 2020 (with an original due date of January 31, 2020), February 28, 2020 (if filed on paper) or March 31, 2020 (if filed electronically), or March 15, 2020; and

  • 2020 information returns that were filed on or before August 1, 2021 (with an original due date of January 31, 2021), February 28, 2021 (if filed on paper) or March 31, 2021 (if filed electronically), or March 15, 2021.

© 2022 ArentFox Schiff LLPNational Law Review, Volume XII, Number 244

About this Author

Rachel Scott Tax Attorney CPA ArentFox Schiff

Rachel assists clients with transactional structuring and diligence with respect to federal, state, and local tax in various industries, including manufacturers, airlines, telecommunications, corn and ethanol producers, health care providers, and individuals. As a Certified Public Accountant, Rachel uses both accounting and tax knowledge to create the best possible tax solutions.

Rachel works with clients on covered property tax, sales and use tax, transfer tax, and franchise and income tax. She has handled civil tax controversy matters and...

Olga Bogush Corporate and Transactional Attorney Schiff Hardin New York, NY

Olga has experience in a broad range of federal income tax matters, including tax issues related to mergers and acquisitions, private investment funds, partnerships, real estate investment trusts, derivatives, debt and equity financing, reorganizations, and U.S. and international tax planning.

Her significant transactional experience includes mergers and acquisitions of public and private companies, including private equity fund portfolio acquisitions and sales, as well as investments and joint ventures in U.S. real estate and businesses. She also counsels clients on the tax aspects...

Evgeny Magidenko Associate Ann Arbor Tax, International , Corporate and Transactional

Gene is a tax attorney who advises individual and corporate clients nationwide and internationally on transactional tax matters, tax controversies, and tax compliance. Gene brings a strategic perspective to his clients’ matters, whether they involve tax planning or disputes with the IRS, by drawing on his breadth of experience in the field, including his work in the private sector and Federal government service.

Before joining Schiff Hardin, Gene worked in the Ann Arbor office of a large Detroit firm, where his practice focused on estate planning and tax matters, and earlier as an...

Robert R. Pluth Tax Attorney Schiff Hardin Chicago, IL

Robert Pluth, Jr. is the Leader of Schiff Hardin’s Tax Practice. Bob represents taxpayers and personal, corporate, and family offices in connection with various federal and state income tax planning and tax controversy matters, including those involving complex tax accounting matters and transactional disputes.

Bob also implements customized tax, succession and estate planning strategies to enable business owners and other wealthy individuals to better achieve their long-term goals.  

Bob thrives on the challenge of making complex tax laws understandable for those planning...