Taxpayers need additional and more extensive relief from penalties for withholding and estimated tax payments, the American Institute of CPAs said this week. The AICPA wrote to leaders of the U.S. Department of the Treasury and Internal Revenue Service saying relief is needed because so many are unable to adjusting withholding and estimated payments for 2018 because of the changes brought about by the Tax Cuts and Jobs Act.Annette Nellen, chair of the AICPA Tax Executive Committee, said the organization appreciated the the underpayment penalty announced recently.
However, she continued, adjusted withholding tables did not account for factors such as the elimination of the personal and dependency exemptions or reduced itemized deductions. That means many were not able to calculate tax for 2018 and may have under-withheld.
The AICPA recommended tax payers receive penalty relief if they do the following:
*Pay at least 80 percent of the tax due for the current year or pay 80 percent of amount of tax shown on the prior-year tax return; 100 percent if adjusted growth income exceeds $150,000.
*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 IRS, the AICPA said, should establish an expedited process for granting payment penalty relief for reasonable cause stemming from the new law. It should identify specific circumstances for which providing automatic relief of penalties for the 2018 is appropriate for businesses and tax-exempt organizations..