Pension & Benefits News IRS announces estimated tax penalty automatically waived for some taxpayers
Friday, September 13, 2019

IRS announces estimated tax penalty automatically waived for some taxpayers

By Pension and Benefits Editorial Staff

The IRS has announced that it would automatically waive the estimated tax penalty for more than 400,000 eligible taxpayers who have already filed their 2018 federal tax returns but did not claim the penalty waiver. This waiver would be applied to tax accounts of all eligible taxpayers. Specifically, the automatic waiver would apply 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 that was available to them when they filed their 2018 return. Additionally, the requirement that estimated tax payments be made in four equal installments by January 15, 2019 has been removed.

The IRS will mail copies of notices CP 21 granting this relief to affected taxpayers. Eligible taxpayers can expect to receive a refund check about three weeks after their CP 21 notice if they paid the penalty, regardless of whether they requested penalty relief. Additionally, the IRS 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.

The IRS urges eligible taxpayers who have not filed their 2018 return yet, including those with tax-filing extensions due on October 15, 2019, to claim the waiver. The quickest and easiest way is to file electronically and take advantage of the waiver computation built into their tax software package. However, those who choose to file on paper can fill out Form 2201 (Underpayment of Estimated Tax by Individuals, Estates, and Trusts) and attach it to their 2018 return.

SOURCE: IRS News Release IR-2019-144.

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