The American Institute of CPAs (AICPA) forwarded correspondence Tuesday to the Department of the Treasury and Internal Revenue Service (IRS), seeking taxpayer penalty relief regarding withholding adjustments and estimated payments.
The effort stems from changes resulting from the Tax Cuts and Jobs Act (TCJA).
Annette Nellen, chair of the AICPA Tax Executive committee, wrote that the adjusted withholding tables did not account for factors such as the elimination of the personal and dependency exemptions or reduced itemized deductions. It then resulted in a number of taxpayers being unable to accurately calculate their tax liability for 2018 and inadvertently under-withheld taxes and potentially face penalties.
The AICPA is advocating taxpayers receive relief from underpayment penalties if they paid at least 80 percent of the tax due for the current year or they paid 80 percent of the amount of tax shown on their income tax return for the prior year. It is also encouraging that taxpayers receive relief from late payment penalties if they make a timely request for an extension of time to file their income tax return and pay at least 80 percent of the taxes owed with the request. The AICPA is also calling on the IRS to establish an expedited process to grant individuals’ payment penalty relief for reasonable cause due to the considerable uncertainty surrounding the TCJA.