The IRS recently issued Notice 2022-36 to offer penalty relief to certain taxpayers. The name of this notice is actually “Penalty Relief for Certain Taxpayers,” which doesn’t offer enough details until delving a bit further into the notice.
This relief is for individuals and businesses who didn’t make their filing deadline for certain 2019 and 2020 tax and information returns. For cannabusiness owners interested in getting some relief, now is the time to get it.
Purpose of Tax Relief Notice 2022-36
The IRS is using Tax Relief Notice 2022-36 to offer penalty relief for those who had specific issues with their 2019 and 2020 tax returns. Businesses and individuals operating in the cannabis industry who did not file their returns in time will have the opportunity to obtain relief. The penalty relief being offered will be automatically applied to qualifying companies and individuals.
The penalty is usually calculated at a minimum rate of 5% each month, up to approximately 25% of the tax that wasn’t paid when the business fails to file its income taxes on time.
The IRS states that the relief is applicable to tax returns in some of the below forms, along with some other forms listed in Notice 2022-36 itself.
- Form 1120 series
- Form 1040 (Individual’s Income Tax Return) as well as other forms in this series
In addition to these explanations, the penalty relief report provides insight into relief for several information return penalties.
The primary goal of this penalty relief notice is to aid taxpayers who have felt the negative impacts that resulted from the COVID-19 pandemic.
What Are the Requirements to Qualify for the Tax Relief Notice?
Anyone interested in taking advantage of this IRS penalty relief will need to have had their returns for 2019 and 2020 filed before September 30, 2022. If you do not have your returns filed before then, you will not be eligible to receive this penalty relief.
Contact Our Experienced Cannabis CPAs Now
Understanding the complexities of penalty relief works is tedious. If you’re curious about how this penalty relief notice will impact you and your cannabis business, please contact us and our cannabis CPAs will guide you through the process. Northstar Financial Consulting Group is a cannabis accounting and advisory firm with decades of combined experience operating in this space. We understand all nuances in the cannabis industry and remain ready to assist cannabis businesses in navigating local and federal accounting and regulatory hurdles.