The IRS, in a news release on Aug. 14, 2019, announced an automatic waiver of the estimated tax penalty for certain taxpayers. The affected taxpayers are those who did not pay 90% of their 2018 tax liability through wage withholding, estimated tax payments or a combination of both. This safe harbor from the estimated tax underpayment penalty was reduced to 85% in an announcement in January, then lowered to 80% in an announcement in March.
This relief affects taxpayers who have filed their 2018 returns, paid at least 80% of their estimated tax, but failed to claim the relief for the reduced 80% requirement. The IRS estimates this to affect about 400,000 taxpayers.
The IRS will mail Notices CP21 to affected taxpayers notifying them of the relief. The press release states that the service will mail refund checks to these eligible taxpayers about three weeks after their CP21 notice is mailed. Eligible taxpayers do not have to contact the IRS or take any action to receive the refund.
Going forward, taxpayers may take advantage of this relief when filing their 2018 returns.