Deadline To File 2019 And 2020 Tax Returns To Get COVID Penalty Relief Postponed In Declared Disaster Areas

The Internal Revenue Service reminds taxpayers in areas covered by certain Federal Emergency Management Agency (FEMA) disaster declarations they may have more time to file their returns to qualify for the penalty relief under Notice 2022-36 for their 2019 and 2020 tax returns.

Under Notice 2022-36, penalties for late-filing certain tax returns, as well as penalties for not reporting certain required information on the Form 1065 or Form 1120-S, are waived or abated if the relevant return was filed on or before Sept. 30, 2022. But individuals and households that reside or have a business in recently declared FEMA disaster areas have postponed deadlines to file the return to get this relief, as noted below.

  • Areas with a deadline of Nov. 15, 2022, include:
    • Counties in Missouri identified under FEMA’s Major Disaster Declaration 4665.
    • Counties in Kentucky identified under FEMA’s Major Disaster Declaration 4633.
    • The island of St. Croix in the U.S. Virgin Islands.
    • Members of the Tribal Nation of the Salt River Pima Maricopa Indian Community.
  • Areas with a deadline of Feb. 15, 2023, include:

The relief under Notice 2022-36 applies to the failure-to-file penalty that is typically assessed at a rate of 5% per month, 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 on IRS.gov.

Unlike the failure-to-file penalty, the failure-to-pay penalty and interest will still apply to any unpaid tax. The failure-to-pay penalty is normally 0.5% (one-half-of-one percent) per month, up to 25%. The interest rate is currently 6%, compounded daily.

Penalty relief for 2019 and 2020 returns 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. This relief is limited to the penalties that the notice specifically states are eligible for relief. For ineligible penalties, such as the failure-to-pay penalty, taxpayers may use existing penalty relief procedures, such as applying for relief under the reasonable cause criteria or the First Time Abate program. Visit IRS.gov/penaltyrelief for details.

Different relief applies to 2021 returns. Visit the disaster relief page on IRS.gov for more information about tax year 2021.

More information:

  • IR-2022-175, IRS: Don’t miss this important Oct. 17 tax extension deadline
  • IR-2022-163, Reminder: File 2019 and 2020 returns by Sept. 30 to get COVID penalty relief

IRS Tax Tip: 2022-185

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