The first tax year under 2017’s Tax Cuts and Job Creation Act has left a lot of taxpayers and tax professionals confused and frustrated. Now with the April 15 deadline just around the corner, the agency announced that it would again expand the threshold for penalties to 80 percent of the total tax liability to receive penalty relief. This is down from the January 16 announcement of an 85 percent threshold, which was down from the IRS’s usual amount of 90 percent of the total obligation if filers wished to avoid penalty.
According to IRS Commissioner Chuck Rettig in a statement about the new adjustment, this 80 percent window will be a one-time-only deal. They did this because there has been so much confusion regarding the new laws. He also added: “The expanded penalty waiver will help many taxpayers who didn’t have enough tax withheld. We continue to urge people to check their withholding again this year to make sure they are having the right amount of tax withheld for 2019.”
Who does this waiver apply to?
The agency says that this waiver will apply to those who pay taxes quarterly, those who pay taxes annually as well as those who pay a combination of the two. This waiver also applies to those who have already filed their taxes but qualify for the expanded window – these taxpayers can file a Form 843, Claim for Refund Request for Abatement and write “80 percent waiver of tax penalty” on line seven of the form. This can be filed electronically.
This will not be the end of it
This waiver will certainly reduce the amount audits and paperwork the IRS will send out in the coming weeks, but there will still be disputes. Those who get letters from the IRS may want to consult with an attorney with experience handling tax disputes. These attorneys can help sort out the confusion and ideally reduce the burden perhaps unfairly placed upon the taxpayer.