14 September 2022

Notice 2022-36 provides only limited relief from information return penalties for tax years 2019 and 2020

As part of its ongoing response to the COVID-19 pandemic, the Internal Revenue Service (IRS) provided penalty relief in Notice 2022-36 for certain tax returns and information returns, such as Forms 1099 and 1042-S, for tax years 2019 and 2020. For additional information about COVID-19 and information reporting requirements and deadlines, please see Tax Alert 2022-1308.

EY Observes: While any penalty relief is welcome, the relief from information return penalties in Notice 2022-36 is limited to narrow circumstances. For example, the relief does not apply to the following:

  • Failure to file accurate information returns ($270 per return for 2019 returns, $280 for 2020 returns), including returns with missing or incorrect taxpayer identification numbers for the payees
  • Failure to timely file information returns filed after August 1 of the applicable year ($270 per return for 2019, $280 per return for 2020)
  • Failure to file as a result of intentional disregard of the filing requirement (typically 10% of the amount required to be reported)
  • Penalties related to payee statements (i.e., the copy of the information return required to be provided to the payee)
  • Penalties a filer has agreed to pay under an accepted offer in compromise under IRC Section 7122 or a closing agreement under IRC Section 7121
  • Penalties finally determined in a judicial proceeding

As the relief in Notice 2022-36 does not extend to these forms, these penalties still apply. Filers may, however, request abatement of penalties for reasonable cause for those penalties not addressed in the notice.

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Contact Information
For additional information concerning this Alert, please contact:
 
Financial Services Organization
   • Tara Ferris (tara.ferris@ey.com)
   • David Jensen (david.jensen@ey.com)
   • Justin O’Brien (justin.obrien@ey.com)
   • Debbie Pflieger (deborah.pflieger@ey.com)
   • Jonathan Jackel (jonathan.jackel@ey.com)
   • Todd Larsen (todd.larsen@ey.com)
   • Doug Sawyer (douglas.sawyer@ey.com)
   • Tom Smith (tom.smith@uk.ey.com)
   • David Taylor (david.taylor2@ey.com)

Document ID: 2022-1378