As taxpayers and preparers sorted through the 2017 TC&JA, it was not always clear how someone would be affected by the numerous changes in deductions, credits, deferrals, and tax rates. The end result was some taxpayers did not know what their tax bill would be until their return was prepared. This meant Estimated Tax Penalties might have been generated if there was a large balance due.
Since it was estimated nearly 30 million 2018 taxpayers might have been affected, the IRS issued IR 2019-144 on August 14, 2019, to provide automatic relief to eligible taxpayers who already filed their 2018 returns. Affected taxpayers qualify for this relief if 80 % of their 2018 tax liability was paid in by January 15, 2019.
Over the next few months, the IRS will mail a Notice CP 21 to affected taxpayers which will advise them of the relief. Taxpayers who already paid the penalty will receive a refund check in about three weeks after the Notice CP 21 was mailed. No other action will be required.
Ray Thomas, CPA
Ray joined Hancock & Dana in 2014. He specializes in representing individual and business clients with IRS issues including Audits, Notices, Collection, Employment Tax, Appeals, and Offer-In-Compromise. Ray joined Hancock & Dana after a 26-year career with the IRS as a Revenue Agent and manager. This background provides a unique understanding of how to resolve and prevent issues with the IRS.