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FOCUS  


 


Te Internal Revenue Service is automatically waiving the estimated tax penalty for the more than 400,000 eligible taxpayers who already filed their 2018 federal income tax returns but did not claim the waiver.


Te IRS will apply this waiver to tax accounts of all eligible taxpayers, so there is no need to contact the IRS to apply for or request the waiver. Earlier this year, the IRS lowered the usual 90% penalty threshold to 80% to help taxpayers whose withholding and estimated tax payments fell short of their total 2018 tax liability. Te agency also removed the requirement that estimated tax payments be made in four equal installments, as long as they were all made by Jan. 15, 2019. Te 90% threshold was initially lowered to 85% on Jan 16 and further lowered to 80% on March 22.


Te automatic waiver applies to any individual


taxpayer who paid at least 80% of their total tax liability through federal income tax withholding or quarterly estimated tax payments but did not claim the special waiver available to them when they filed their 2018 return earlier this year. “Te IRS is taking this step to help affected


taxpayers,” said IRS Commissioner Chuck Rettig. “Tis waiver is designed to provide relief to any person who filed too early to take advantage of the waiver or was unaware of it when they filed.”


  Over the next few months, the IRS will mail copies of notices CP 21 granting this relief to affected taxpayers. Any eligible taxpayer who already paid the penalty will also receive a refund check about three weeks after their CP21 notice regardless if they requested penalty relief. Te agency emphasized that eligible taxpayers who have already filed a 2018 return do not need to request penalty relief, contact the IRS or take any other action to receive this relief. For those yet to file, the IRS urges every eligible taxpayer to claim the waiver on their return. Tis includes those with tax-filing extensions due to run out on Oct. 15, 2019. Te quickest and easiest way is to file electronically and take advantage of the waiver computation built into their tax software package.


16 CPAFOCUS


September/October 2019


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