Time is running out: How to claim your share of $1.2 billion in IRS rebates before it's too late

The relief applies to the failure to file penalty, which can be hefty. The penalty grows at about 5% per month up to 25% of the taxes that are unpaid when you finally do file. The IRS says “most people and businesses” who filed “certain” returns late will be eligible.

For 1.6 million taxpayers, that means they could soon receive an average refund of $750, which will add up to more than $1.2 billion in rebates.

But if you’re one of those 1.6 million, you’ll need to act fast or you could miss out.

Many people missed the deadline

Let’s be honest, deadlines were hard to meet during pandemic lockdowns for a lot of reasons.

“This will help a lot of taxpayers that couldn't meet with their accountants, couldn't file their taxes on time,” says Eileen Sherr, director for tax policy and advocacy with the American Institute of Certified Public Accountants (AICPA).

The relief applies to the 1040 and 1120 form series, which deal with income and corporate taxes. And Sherr says the move on the IRS's part was necessary.

“We've been asking for it for years now, since the beginning of the pandemic,” she says.

Sherr points out that a larger than average number of people failed to meet the filing deadlines during the pandemic because of business closures and administrative backlogs.

“Sometimes it was just like a day or two late, a week or two late, but there were penalties that were assessed,” Sherr says.

But because the IRS only announced the relief in August, the AICPA worries many people might not be able to meet the deadline. To that end, the organization sent a letter to the IRS requesting that the deadline extension for getting the 2019 and 2020 taxes be extended beyond Sept. 30 to the end of the year.

“Especially if you have taxpayers who are abroad, and they're trying to file and get all their returns — it's really hard to get everything in time to meet this short deadline,” says Sherr. “It would just give more time for more people to voluntarily comply, if they haven't, and for all the penalty issues to be resolved.”

How to make sure you get it

If you haven’t filed your 2019 or 2020 taxes yet, then you’ll need to do so by Sept. 30 to be eligible for relief.

But if you’ve already filed and paid a penalty, then you shouldn’t have to do anything to get your refund. That being said, if you’re expecting a refund, Sherr suggests checking your account on the IRS website.

However, keep in mind that it may take a few weeks for the refund to be processed. And the forgiveness only applies if you filed late, not if you paid late.