IRS announces it will refund $1.2 billion in penalties for those who filed late during pandemic

The Internal Revenue Service announced this week that it will refund millions of individual and business tax filers penalties they paid for filing their taxes late during the height of the coronavirus pandemic.

The announcement from the IRS details a plan to repay penalties collected from 1.6 million filers for 2019 and 2020 tax filings due to a backup caused by the pandemic that resulted in a major backlog in processing returns at the IRS.

The agency explains the COVID-19 pandemic had an “unprecedented effect on the IRS’s personnel and operations,” and that it was “called upon to support emergency relief for taxpayers, such as distributing economic impact payments,

3 while sustaining its regular operations in a pandemic environment with limited resources, where employees were sometimes unable to be physically present to process tax returns and correspondence.”

Recipients of the refund will not have to take any action in order to receive it. The funds will be automatically refunded to recipients and should be largely completed by the end of the month, according to the announcement. 

“Besides providing relief to both individuals and businesses impacted by the pandemic, this step is designed to allow the IRS to focus its resources on processing backlogged tax returns and taxpayer correspondence to help return to normal operations for the 2023 filing season,” the IRS said.