Here’s How to Claim Your Share of a Massive IRS Refund

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Late filers, rejoice.

We know that dealing with your finances can be a headache, but this latest news is probably worth gritting your teeth through.

The IRS is set to send out more than $1.2 billion in refunds to Americans who received penalties for filing their 2019 and 2020 tax returns — i.e., their pandemic returns — late. 

The refund applies to nearly 1.6 million late filers, including both small businesses and individuals, many of whom will receive automatic payments. If you haven’t yet filed your returns for those two years, you’ll need to make it happen by Sept. 30. And if you already filed them but did so after that year’s deadline, you can either receive a refund on the penalties you paid or have your bill canceled if you haven’t paid the late fees yet.

“Throughout the pandemic, the IRS has worked hard to support the nation and provide relief to people in many different ways,” IRS Commissioner Chuck Rettig said in an official statement. “The penalty relief issued today is yet another way the agency is supporting people during this unprecedented time. This penalty relief will be automatic for people or businesses who qualify; there’s no need to call.”

The penalty for being late is usually calculated as 5 percent of your unpaid balance per month, up to 25 percent of the unpaid tax. According to the IRS website, this relief applies to both the Form 1040 and 1120 series, as well as others listed in Notice 2022-36, posted on IRS.gov.

Individual, corporate, estates and trusts returns, among others, are all eligible, and the IRS has indicated the refunds will run about $750 per return, on average.

The move is particularly welcome in the face of growing outrage over the backlog of unprocessed returns for the last few years. The rebate will serve the dual purpose of appeasing a significant number of taxpayers, as well as reducing the agency’s workload — which increases with every notice triggered by missing returns.

“With this broad relief, the burden on taxpayers, tax professionals and IRS staff should be alleviated to some extent,” Albert Campo, a CPA and president of AJC Accounting Services in Manalapan, New Jersey said per CBS News.