The IRS has some refunds owed to taxpayers who were mistakenly left out of relief programs introduced during the pandemic, according to a recent audit by a watchdog group.
Over 2,100 tax returns were amended after the auditors found these individuals were eligible for around $463,000. The findings come from a report released by the Tax Administration Inspectorate of the Ministry of Finance.
The audit indicates that 2,138 taxpayers should have received non-payment penalty relief for unpaid taxes in 2020 and 2021. On average, the penalty refund per account is about $206, though the precise amount may vary based on individual circumstances.
The report noted that the IRS applied these unpaid amounts to the accounts of the taxpayers. In most cases, this means it reduces any outstanding balance, or if there’s no balance, a refund could be issued by check or direct deposit.
About 5 million individuals, businesses, and other entities have already benefitted from approximately $1 billion in penalty relief under a temporary program announced by the IRS in December 2023. This relief period started when the IRS sent the first balance notice to the taxpayer or on February 5, 2022, whichever came later, and will run until March 31, 2024.
Fines can “add up quickly”
The late payment penalty for taxes generally stands at 0.5% of the unpaid amount per month, with a maximum possible penalty of 25%. Interest on unpaid taxes accumulates daily, pegged to the federal funds rate plus an additional 3 percentage points.
There is also a penalty for failed tax return submissions, which is set at 5% of unpaid tax for each month or partial month a return is late, again capped at 25%. “This really can add up fast,” noted Josh Youngblood, a registered agent based in Dallas.
He emphasized the importance of filing even if one can’t pay, saying, “The IRS has options available to help.”
Considerations for the 2026 tax season
As the 2026 tax season kicks off, several factors come into play for those preparing their returns quickly to avert penalties or interest. If you plan to mail your return, doing so well ahead of the April 15 deadline is essential.
With recent adjustments in operations at the U.S. Postal Service, there are expected delays in mail delivery and processing. This means just mailing your return on time doesn’t guarantee it will be postmarked the same day.
The IRS acknowledges that returns postmarked by April 15 are deemed timely filed, but dropping it in a mailbox isn’t a sure way of ensuring that. Planning ahead or having a clerk cancel the mailing can help mitigate issues.
Moreover, with the IRS’s workforce having shrunk by 27% and changes to the tax code via President Trump’s tax legislation, the success of this season will hinge on how effectively the IRS supports millions of taxpayers facing issues, as pointed out by Erin Collins of the National Tax Advocacy Group.
The IRS anticipates about 164 million individual tax returns will be submitted by the April 15th deadline.
