IRS COVID Penalty Relief: Last Chance to File Before the July 10, 2026 Deadline
If you owed the IRS money for tax years 2020 or 2021, there's a good chance you were hit with penalties — and you may have never needed to pay them.
The IRS has been waiving penalties and interest for taxpayers who had balances due during the COVID-19 emergency period. This relief has been available since 2022, but the final deadline to claim it is July 10, 2026. After that date, the opportunity closes permanently.
For eligible taxpayers, this could mean thousands of dollars back in your pocket — or a significant reduction in what you owe.
What the IRS Is Waiving
The relief covers the failure-to-pay penalty and failure-to-deposit penalty that accrued during the COVID period. In many cases, the IRS has already reduced these penalties to zero for qualified taxpayers — but if your account still reflects penalties, you may need to take action to have them formally abated.
The relief applies to:
- Failure to pay penalties on balances due for tax year 2020 and 2021
- Failure to deposit penalties for the same period
- Interest that accrued on those penalties
This is separate from any underlying tax liability — it only clears the penalties and interest, not the original tax owed. If you owe back taxes, that's still due. But the penalty abatement alone can represent a substantial reduction in your total obligation.
Who's Eligible
The IRS has identified most eligible taxpayers automatically, but not everyone. Eligibility generally covers taxpayers who:
- Had a balance due for tax year 2020 or 2021
- Received a penalty notice related to those years
- Have not yet had the penalties formally abated
If you've been making payments on a 2020 or 2021 balance and still seeing penalty charges on your account, you likely qualify for relief.
Certain high-income taxpayers and large businesses may have been excluded from automatic relief. If you fall into that group, you can still apply manually.
The Filing Process: Form 843
To formally request penalty abatement, you file IRS Form 843 — Claim for Refund and Request for Abatement. The form allows you to specify which penalties you're requesting to have abated and on which tax years.
Key steps:
- Download Form 843 from irs.gov or request it from the IRS
- Identify the penalties you want abated — typically lines for "Failure to pay tax" and/or "Failure to deposit"
- Enter the tax periods — specify the tax year and the type of tax (e.g., income tax, 941 payroll tax)
- Explain the basis for the claim — cite the COVID-19 penalty relief guidance (Rev. Proc. 2022-38 or subsequent guidance)
- File with the IRS — either mail it to the address on the form or work with a tax professional to submit it electronically if available
The IRS typically processes penalty abatement claims within 30–90 days. If you're already in an installment agreement, the abatement can be applied directly to your balance.
Why the July 10 Deadline Matters
The IRS has set July 10, 2026 as the hard cutoff for this relief program. After that date, penalty abatement requests citing COVID-19 relief will no longer be accepted under this program.
Even if you've been on a payment plan for several years, the underlying penalties may still be sitting on your account — and they won't go away automatically after the deadline passes. If you know you had a balance due for 2020 or 2021 and haven't checked your penalty status, now is the time to do it.
How to Check Your Account
You can see your current balance and penalty status by:
- Creating an IRS Online Account — at irs.gov, you can view your tax records, balance due, and recent notices
- Reviewing recent IRS correspondence — penalty abatement notices are sent by mail
- Calling the IRS — their revenue officers can confirm whether penalty relief has been applied to your account
If you're working with a tax professional or enrolled tax preparer, ask them to pull your account transcripts for 2020 and 2021 to check for any remaining penalties.
The Bottom Line
The IRS COVID penalty relief window is closing in 46 days. If you had a balance due for tax years 2020 or 2021 and still see penalties on your account, you have a limited opportunity to have those penalties formally abated — potentially recovering hundreds or thousands of dollars.
If you've been meaning to get your tax affairs in order, this deadline adds urgency. After July 10, 2026, that opportunity is gone.
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