More than a million Americans who submitted their taxes late during the early stages of the COVID-19 outbreak are receiving refunds from the Internal Revenue Service. The EPA said on Monday that taxpayers had until September 30 to take advantage of this respite.
People who submit their tax returns after the deadline without asking an extension often have to pay fines equal to up to 25% of the taxes they owe. However, the organization is suspending fines for late filers for 2019 and 2020. The IRS said that it would automatically provide refunds to taxpayers who have previously paid a fine.
Over 1.6 million taxpayers are anticipated to get refunds or credits totalling $1.2 billion, or, on average, $750 each. However, some taxpayers may receive more or less.
The IRS said that taxpayers who have already submitted their returns are exempt from further action. The penalty will be cancelled for people who have been informed of a fine but haven’t yet paid it. For those who have already made a payment, a refund or credit will be issued. According to the agency, the majority of the reimbursements will be sent out by the end of September.
Penalties for taxpayers who have not yet submitted their 2019 and 2020 tax returns may still be waived as long as they do so by September 30, 2022. That allows late filers a little more than two weeks to complete unfinished returns.
The effort is a move to “help struggling taxpayers affected by the COVID-19 pandemic,” according to the IRS. The plan could also help the agency, which is struggling to dig itself out of a massive backlog of unprocessed tax returns.
The pandemic has had an “unprecedented” effect on the tax agency, the IRS said in a notice, highlighting the agency’s role in distributing federal stimulus payments and taking other steps to help taxpayers weather the pandemic.
Dropping late-filing penalties could also benefit the IRS by helping the agency focus on whittling down its backlog of tax paperwork and returning to normal for the 2023 tax season.