The Internal Revenue Service recently opened the door to penalty relief for people who still haven’t filed their tax year 2019 and 2020 returns — and now the taxman is about to firmly shut that door.
Sept. 30 marks the last day households can submit income-tax returns for those tax years, and avoid a penalty.
Some tax-professional groups and federal lawmakers were hoping the IRS would extend the deadline they thought was coming too fast, but the agency is not budging.
Another big deadline: People who got an extension to file their tax returns this year must finally submit their return by Oct. 17.
“Given planning for the upcoming tax season and ongoing work on the inventory of tax returns filed earlier this year, this penalty-relief deadline of Sept. 30 strikes a balance,” IRS Commissioner Charles Rettig said in a statement.
The IRS planned to dole out an estimated $1.6 billion in credits and reimbursements to approximately 1.2 million taxpayers, the agency said last month when it announced the penalty waiver.
“For any late filers who wish to beat the deadline, it’s better to file the returns electronically rather than mailing in a hard copy.”
Though the average payout could work out at $750 when dividing the sum by the amount of eligible taxpayers, payments could vary based on the amounts of taxes owed and when the return came in.
The good news: The clock on the penalty only starts ticking in October — not one or two years ago.
The waiver is a break for taxpayers, because the failure-to-file penalty can be more costly on a monthly basis (5% of unpaid tax) compared to the failure-to-pay penalty (0.5% of the unpaid tax).
It’s also a chance for the IRS to stay focused on shrinking an unprocessed tax return backlog that’s at 6.9 million as of mid-September.
For any late filers who wish to beat the deadline, it’s better to file the returns electronically rather than mailing in a hard copy.
In the aftermath of Hurricane Ian’s destruction, the IRS said Florida residents now have until Feb. 15, 2023 to file their 2021 tax returns if they received an extension.
However, the Sept. 30 deadline to submit tax year 2019 and 2020 returns and avoid the failure to file penalty still remains for everyone, an IRS spokesman said.
