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This Year’s Automatic Tax Penalty Waiver


This year, the IRS is automatically waiving tax penalties for nearly 400,000 taxpayers who have already filed last year’s return, but who failed to claim the waiver. Fortunately, the IRS will apply this waiver to the accounts of all qualifying taxpayers who have already filed their returns, so these individuals are not required to apply for or request the waiver in order to receive it. If you have questions about whether you are eligible for this waiver, please contact the experienced Florida tax return preparation lawyer Ronald Cutler who is familiar with the recent changes made by the IRS and can properly advise you.

Paying Tax Obligations

The U.S. tax system is, for the most part, a pay-as-you-go system, so taxpayers are required to pay most of their tax debt during the year. This can be achieved by withholding a certain amount from one’s paychecks, Social Security benefits, or pension payments, or by making estimated tax payments throughout the year. Unfortunately, even those who are careful to check their withholding for the next year could end up facing an unexpected bill or penalty. This is especially common for those who:

  • Itemized their deductions in the past, but who now opt for the standard deduction;
  • Are a part of a two wage earner household;
  • Have non-wage sources of income;
  • Made withholding adjustments last year; or
  • Experienced a major life change.

Individuals who find themselves in these situations could face a tax bill or penalty that they did not expect. In these cases, the new IRS penalty waiver can make all the difference in reducing tax payments.

Reduced Penalty Threshold

Earlier this year, the IRS announced that it would be lowering the standard penalty threshold for those whose estimated tax payments and withholding fell short of their total tax debt for 2018. Unlike in prior years, when this threshold was set at 90 percent, taxpayers are now only required to pay at least 80 percent of their tax debt to qualify for the waiver. In addition to lowering the penalty threshold, the IRS also eliminated the requirement that estimated fees be made in four equal payments. This requirement, however, is only waived for those whose estimated tax payments were submitted before January 15, 2019.

Refunds for Eligible Taxpayers

The automatic penalty waiver only applies to taxpayers who:

  • Paid at least 80 percent of their tax liability through withholding or quarterly payments; and
  • Did not claim the waiver when they filed their 2018 return.

Those who satisfy these requirements should begin receiving notices in the mail, alerting them that they qualify for penalty relief. Eligible taxpayers who have already paid their penalty can also expect to receive a refund, usually within three weeks after their notice arrives, even if they never requested penalty relief. In fact, taxpayers who have already filed their returns for 2018 do not need to request the waiver at all. The only taxpayers who must do so are those who have yet to file their tax returns, including taxpayers who were granted filing extensions. Taxpayers who fall under this category are encouraged to claim the waiver when they submit their returns, either by completing Form 2210 and attaching it to their returns, or filing the form electronically.

An Experienced Tax Return Preparation Attorney

To speak with dedicated Florida tax return preparation lawyer Ronald Cutler, P.A. about the new automatic tax penalty waiver, please call us at 386-490-9949 today.