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IRS expands penalty waiver

There is more than the usual amount of confusion this tax season with 2017’s Tax Cuts and Job Creation Act going into effect. Addressing this issue, the IRS said that it would be more lenient if filers were close to tax liability for the year.

Now it has announced that it is lowering the threshold again, stating in an announcement that 80 percent of the total liability would receive penalty relief. This is down from the 85 percent announced January 16 of this year and the usual 90 percent filers need to pay to avoid a penalty.

This is reportedly a one-time-only arrangement. According to IRS Commissioner Chuck Rettig in the statement, “We heard the concerns from taxpayers and others in the tax community, and we made this adjustment in an effort to be responsive to a unique scenario this year.”

He went on to point out that the expanded penalty waiver is also there to remind taxpayers to check their withholding's for this year to avoid making the same mistake again next year when the IRS will not be so understanding.

Who does this apply to?

The 80 percent threshold will apply to those who pay taxes annually, those who pay quarterly and those who pay a combination of the two. Taxpayers who have already filed their taxes for the year but qualify for expanded relief can file a Form 843, Claim for Refund Request for Abatement. They should write 80 percent waiver of tax penalty on Line 7 of the form, which can be filed electronically.

There will still be many disputes

The IRS is indeed being more generous than usual with what it perceives as erroneous filings, but this change to the tax law has left many on both sides confused. Those who believe they filed the correct amount but got a letter from the IRS saying otherwise should speak with a tax law attorney who handles disputes. While they may not always be able to have a fine or lien removed without payment, they often can argue for a more reasonable solution.

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William T. Peckham
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