Earlier this year, the IRS lowered the usual 90% penalty threshold to 80%. This was done to help taxpayers whose withholding and estimated tax payments fell short of their total 2018 tax liability. The agency also removed the requirement that estimated tax payments be made in four equal installments, as long as they were made by Jan 15, 2019.
The 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 payments, but did not not claim the special waiver available to them when they filed their 2018 return earlier this year.
In an Effort to Help Taxpayers
According to IRS Commissioner Chuck Rettig, “the IRS is taking this step to help affected taxpayers.” In addition, he states, “This 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.”
The IRS will mail copies of notice CP 21 granting this relief to the affected taxpayers. Any eligible taxpayer who has already paid the penalty will also receive a refund check about three weeks after their CP 21 notice regardless of whether or not they requested penalty relief.
What You Need To Do
For those yet to file their 2018 tax return, the IRS urges every eligible taxpayer to claim the waiver on their return. This includes those with tax-filing extensions due to run out on October 15th, 2019.
The waiver most likely applies to anyone with unexpected tax bill or penalty on their tax return this year. It also likely applies to those who made withholding adjustments in 2018 or had a major life change. Those that are high at risk for having too little tax withheld include those who itemized in the past but now take the increased standard deduction, as well as two wage-earner households, employees with non-wage sources of income and those with complex tax situations.
To discuss, give us a call at 678-235-5460, or send an email to Gary.Massey@MasseyandComapnyCPA.com. You can also contact us directly through our website by visiting our Home Page
Massey and Company is a boutique, Atlanta-based CPA firm serving the needs of small businesses and their owners. We handle tax matters, IRS controversy, tax debts, back taxes, bookkeeping, and accounting. Our offices are in the Buckhead neighborhood of Atlanta and we welcome face-to-face visits.
Gary Massey, CPA
Massey and Company CPA
P.O. Box 421396, Atlanta, GA 30342
Massey and Company