IRS will not penalize miscalculations that come close

Tax Law
IRS will not penalize miscalculations that come close
On Behalf of Mockensturm, Ltd | Jan 01, 2019 |

The 2019 tax season is going to be one of the most confusing and frustrating in memory. The combination of using the new guidelines set out in 2017’s Tax Cuts and Jobs Act as well as the government shutdown impacting all non-essential workers in the Treasury Department will certainly add new challenges to an already difficult process of filing taxes.

Notable changes include:

  • Tax brackets
  • Child tax credit
  • Tax obligations in divorce arrangements
  • Which companies qualify for 20 percent tax deduction as pass throughs
  • Tax rate for companies that provide a variety of different services

Filers catch a break

Lawmakers on the Senate Finance Committee are conscious of the new challenges and have called upon the IRS and Treasury Department to not penalize those who underpay within 15 percent of the correct amount owed. “The IRS should consider what action the agency can take to provide penalty relief,” Senator Chuck Grassley said from the floor of the Senate. “But the issue of underwithholding due to the passage of tax reform should not be exaggerated.”

This accommodation applies both to withholdings by the employer or estimated quarterly payments by the self-employed and businesses. Those who do not pay the correct amount have until the April 15 deadline, or they can file a six-month extension.

This accommodation may not be enough

In light of the confusion, some educated guessing may not even come close. While the government may have a mindset of leniency, those filing should not count on the good graces of the IRS. Moreover, the winds of change surrounding tax issues are blowing, making it hard for the average individual, family and business to keep up. Knowledgeable legal guidance will usually help those with concerns of a dispute by either avoiding the issue or providing solutions before small disputes become bigger ones.

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