Internal Revenue Service, Notice 2022-36, Penalty Relief for Certain Taxpayers Filing Returns for Taxable Years 2019 and 2020
Summary
IRS Notice 2022-36 gives penalty relief to certain taxpayers filing returns for taxable years 2019 and 2020. The IRS will not impose, and will automatically abate, refund or credit, failure-to-file additions under section 6651(a)(1), certain international information return penalties, and partnership and S corporation return penalties for 2019 and 2020 returns filed on or before September 30, 2022. It also waives section 6721(a)(2)(A) penalties for 2019 information returns filed by August 1, 2020 and 2020 returns filed by August 1, 2021. Relief does not reach fraud penalties, offers in compromise, closing agreements or judicially determined penalties. The notice cites the effect of the COVID-19 pandemic on IRS operations.
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Part III — Administrative, Procedural, and Miscellaneous
Penalty Relief for Certain Taxpayers Filing Returns for Taxable Years 2019 and 2020
Notice 2022-36
SECTION 1. PURPOSE
This notice provides relief for certain taxpayers from certain failure to file penalties
and certain international information return (IIR) penalties with respect to tax returns for
taxable years 2019 and 2020 that are filed on or before September 30, 2022. This
notice also provides relief from certain information return penalties with respect to
taxable year 2019 returns that were filed on or before August 1, 2020, and with respect
to taxable year 2020 returns that were filed on or before August 1, 2021. The relevant
penalties will be waived or, to the extent previously assessed, abated, refunded, or
credited, as described in section 3.A of this notice. Situations where penalty relief does
not apply are described in section 3.B of this notice.
SECTION 2. BACKGROUND
Section 6651(a)(1) of the Internal Revenue Code (Code) generally imposes an
addition to tax for a failure to file (on or before the date prescribed) a tax return that is
required under the authority of subchapter A of chapter 61 (other than part III regarding
2
information returns) of the Code, including certain income tax returns. 1
Section 6038 generally imposes a penalty for the failure of certain United States
persons to furnish (on or before the date prescribed) certain information with respect to
a controlled foreign corporation or a controlled foreign partnership that the person owns.
Section 6038A(d) imposes a penalty on a “25-percent foreign-owned” domestic
corporation or wholly foreign-owned domestic disregarded entity for the failure to furnish
(on or before the date prescribed) certain information or the failure to maintain certain
records.
Section 6038C(c) imposes a penalty on a foreign corporation engaged in a U.S.
trade or business for the failure to furnish (on or before the date prescribed) certain
information or the failure to maintain certain records.
Section 6039F(c) imposes a penalty on a United States person for the failure to
furnish (on or before the date prescribed) certain information with respect to the receipt
of large gifts or bequests from foreign persons.
Section 6677 generally imposes a penalty on a United States person for the failure to
file (on or before the date prescribed) a notice or return required by section 6048 with
respect to transactions with, or ownership of, a foreign trust.
Section 6698(a)(1) generally imposes a penalty for the failure of any partnership to
file (on or before the date prescribed) the return required under section 6031. Section
6698(a)(2) generally imposes a penalty for filing a return that fails to show the
information required under section 6031.
1
Unless otherwise stated, all “section” references are to provisions of the Code.
3
Section 6699(a)(1) generally imposes a penalty for the failure of any S corporation
(as defined in section 1361(a)(1)) to file (on or before the date prescribed) a return
required under section 6037. Section 6699(a)(2) generally imposes a penalty for filing a
return that fails to show the information required under section 6037.
Section 6721(a)(2)(A) generally imposes a penalty for the failure to file an
information return (as defined in section 6724(d)(1)) on or before the required filing date.
The foregoing penalties do not apply if the taxpayer can show that the failure to
timely file the return or to furnish the required information or to provide the required
notice, as applicable, is due to reasonable cause. See §§ 6651(a)(1), 6038(c)(4)(B),
6038A(d)(3), 6038C(c), 6039F(c)(2), 6677(d), 6698(a) flush language, 6699(a) flush
language, and 6724(a).
On March 13, 2020, the President of the United States issued an emergency
declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act,
42 U.S.C. 5121 et seq., in response to the ongoing Coronavirus Disease 2019 (COVID-
19) pandemic (Emergency Declaration). 2 The Emergency Declaration instructed the
Secretary of the Treasury “to provide relief from tax deadlines to Americans who have
been adversely affected by the COVID-19 emergency, as appropriate, pursuant to 26
U.S.C. 7508A(a).” In response, the Department of the Treasury (Treasury Department)
and the Internal Revenue Service (IRS) issued a series of notices and other guidance to
provide relief to affected taxpayers. In particular, Notice 2020-17, 2020-15 I.R.B. 590,
2
https://trumpwhitehouse.archives.gov/briefings-statements/letter-president-donald-j-trump-emergency-
determination-stafford-act/.
4
postponed the due date for certain Federal income tax payments from April 15, 2020,
until July 15, 2020. Notice 2020-18, 2020-15 I.R.B. 590, superseded Notice 2020-17
and provided expanded relief postponing the due date for filing Federal income tax
returns that were originally due on April 15, 2020, to July 15, 2020, among other things.
Notice 2021-21, 2021-15 I.R.B. 986, postponed the due date for filing Federal income
tax returns in the Form 1040 series and making certain Federal income tax payments
that were originally due on April 15, 2021, to May 17, 2021.
Additions to tax or penalties for failure to timely file returns continued to accrue for
taxpayers who did not file by the postponed due dates.
The COVID-19 pandemic has also had an unprecedented effect on the IRS’s
personnel and operations. The agency 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.
In response to these challenges, the IRS has been working aggressively to process
backlogged returns and taxpayer correspondence to return to normal operations for the
2023 filing season. The Treasury Department and the IRS have determined that the
penalty relief described in this notice will allow the IRS to focus its resources more
effectively, as well as provide relief to taxpayers affected by the COVID-19 pandemic.
SECTION 3. GRANT OF RELIEF
3
The IRS, in coordination with the Bureau of the Fiscal Service, issued more than 476.1 million payments
through three rounds of economic impact payments, totaling more than $814.4 billion during 2020 and
2021. IRS Data Book, 2021, Publication 55-B.
5
A. Waiver and Abatement of Certain Penalties for Taxpayers
The IRS will not impose the penalties listed in section 3.A.(1) through (4) of this
notice with respect to the specified tax returns for taxable years 2019 and 2020 that are
filed on or before September 30, 2022. The penalties listed in this section 3.A of this
notice will be automatically abated, refunded, or credited, as appropriate without any
need for taxpayers to request this relief.
(1) Additions to tax under section 6651(a)(1) for failure to file the following income
tax returns:
• Form 1040, U.S. Individual Income Tax Return; Form 1040-C, U.S. Departing
Alien Income Tax Return; Form 1040-NR, U.S. Nonresident Alien Income Tax
Return; Form 1040-NR-EZ, U.S. Income Tax Return for Certain Nonresident
Aliens With No Dependents; Form 1040 (PR), Federal Self-Employment
Contribution Statement for Residents of Puerto Rico; Form 1040-SR, U.S.
Tax Return for Seniors; and Form 1040-SS, U.S. Self-Employment Tax
Return (Including the Additional Child Tax Credit for Bona Fide Residents of
Puerto Rico);
• Form 1041, U.S. Income Tax Return for Estates and Trusts; Form 1041-N,
U.S. Income Tax Return for Electing Alaska Native Settlement Trusts; and
Form 1041-QFT, U.S. Income Tax Return for Qualified Funeral Trusts;
• Form 1120, U.S. Corporation Income Tax Return; Form 1120-C, U.S. Income
Tax Return for Cooperative Associations; Form 1120-F, U.S. Income Tax
Return of a Foreign Corporation; Form 1120-FSC, U.S. Income Tax Return of
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a Foreign Sales Corporation; Form 1120-H, U.S. Income Tax Return for
Homeowners Associations; Form 1120-L, U.S. Life Insurance Company
Income Tax Return; Form 1120-ND, Return for Nuclear Decommissioning
Funds and Certain Related Persons; Form 1120-PC, U.S. Property and
Casualty Insurance Company Income Tax Return; Form 1120-POL, U.S.
Income Tax Return for Certain Political Organizations; Form 1120-REIT, U.S.
Income Tax Return for Real Estate Investment Trusts; Form 1120-RIC, U.S.
Income Tax Return for Regulated Investment Companies; and Form 1120-
SF, U.S. Income Tax Return for Settlement Funds (Under Section 468B);
• Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income
Tax Return; and
• Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust
Treated as Private Foundation; and Form 990-T, Exempt Organization
Business Income Tax Return (and Proxy Tax Under Section 6033(e)).
(2) Certain penalties under sections 6038, 6038A, 6038C, 6039F and 6677 for failure
to timely file the following IIRs:
• Penalties systematically assessed when a Form 5471, Information Return of
U.S. Persons With Respect To Certain Foreign Corporations, and/or Form
5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a
Foreign Corporation Engaged in a U.S. Trade or Business, is attached to a
late-filed Form 1120 or Form 1065; and
• Penalties assessed by the campus assessment program with respect to
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filings on Form 3520, Annual Return To Report Transactions With Foreign
Trusts and Receipt of Certain Foreign Gifts, and on Form 3520-A, Annual
Information Return of Foreign Trust With a U.S. Owner (Under section
6048(b)).
(3) Penalties under section 6698(a)(1) for failure to timely file and under section
6698(a)(2) for failure to show the required information on a Form 1065, U.S. Return of
Partnership Income.
(4) Penalties under section 6699(a)(1) for failure to timely file and under section
6699(a)(2) for failure to show the required information on a Form 1120-S, U.S. Income
Tax Return for an S corporation.
In addition, the IRS will not impose the penalties under section 6721(a)(2)(A) for
failure to timely file any information return (as defined in section 6724(d)(1)) that meets
the following criteria:
• 2019 returns that were filed on or before August 1, 2020, with an original due
date of January 31, 2020; February 28, 2020 (if filed on paper) or March 31,
2020 (if filed electronically); or March 15, 2020; or
• 2020 returns that were filed on or before August 1, 2021, with an original due
date of January 31, 2021; February 28, 2021 (if filed on paper) or March 31,
2021 (if filed electronically); or March 15, 2021.
B. Exceptions
The penalty relief described in this notice does not apply to any penalties that are not
specifically listed in the grant of relief under section 3.A of this notice. In addition, the
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penalty relief described in section 3.A of this notice is not available with respect to any
return to which the penalty for fraudulent failure to file under section 6651(f) or the
penalty for fraud under section 6663 applies. The penalty relief described in this notice
also does not apply to any penalties in an accepted offer in compromise under section
7122 because acceptance of the offer conclusively settled all of the liabilities in the offer
under § 301.7122-1(e)(5) of the Procedure and Administration Regulations. The
penalty relief described in this notice does not apply to any penalty settled in a closing
agreement under section 7121 or finally determined in a judicial proceeding.
SECTION 4. DRAFTING INFORMATION
The principal author of this notice is Han Huang of the Office of the Associate Chief
Counsel (Procedure and Administration). For further information regarding this notice
contact Ms. Huang at (202) 317-6844 (not a toll-free number).
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