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You may get an IRS refund if you filed your taxes late during the pandemic

The IRS is refunding penalties it charged taxpayers for filing their 2019 and 2020 tax returns late as a form of COVID-19 relief.
FILE- Internal Revenue Service taxes forms are seen on Feb. 13, 2019. The flagship climate change and health care bill passed by Democrats and soon to be signed by President Biden will have U.S. taxpayers one step closer to a government-operated electronic free-file tax return system. (AP Photo/Keith Srakocic, File)

People and businesses that paid a penalty for filing their 2019 and 2020 tax returns late will automatically get a refund from the IRS.

The IRS estimates it will refund more than $1.2 billion in failure-to-file penalties to around 1.6 million taxpayers. Most of the refunds will go out by the end of September.

The tax agency announced last month that it would give back the money it fined taxpayers for failing to file their taxes on time during the first two years of the COVID-19 pandemic.

"The penalty relief issued today is yet another way the agency is supporting people during this unprecedented time," IRS Commissioner Chuck Rettig said in an August statement announcing the refunds.

The IRS said issuing the refunds would also allow the agency to "focus its resources on processing backlogged tax returns and taxpayer correspondence" ahead of the 2023 filing season.

How the refunds will work

Taxpayers who file late are typically charged a penalty of 5% of what they owe per month, up to a maximum of 25% of their unpaid tax bill.

There's no need to contact the agency to ask for your money back. The IRS says the refunds will be sent automatically.

Taxpayers who were issued a late filing fee but never paid it will have the charge removed.

Failure-to-pay penalties are not eligible for a refund, the IRS said.

The vast majority of refunds will be sent via check while a small percentage of taxpayers will receive their refunds through direct deposit, according to the Taxpayer Advocate Service, an independent organization within the IRS.

In order to qualify for a refund under the program, individuals and businesses have to have filed their late 2019 and 2020 tax returns on or before Sept. 30, 2022. The Taxpayer Advocate Service is urging taxpayers to file electronically.

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