IRS Mail Backlog and Penalty Abatement Requests
Refund of 2018 and 2019 Kiddie Tax Available

2019 Estimated Tax Underpayment Penalty Calculations Stop at April 15, 2020; Interest on Overpayments of Income Taxes Runs from April 15

Taxpayers normally calculate and pay any penalty for underpayment of estimated taxes with their individual income tax return. However, this year the due date of the individual income tax return was postponed until July 15, 2020, so many taxpayers could not calculate and pay the penalty by April 15. TXCPA’s Federal Tax Policy Committee asked the IRS to provide penalty relief for 2019 estimated tax underpayment penalties in a letter dated March 26, 2020. In response, the IRS did not extend the penalty calculation past April 15. If the 2019 estimated taxes are not paid by July 15, 2020, the penalty will be calculated as a failure to pay penalty, so no matter when 2019 estimated taxes are paid, the underpayment penalty calculation stops as of April 15.

For overpayments of income taxes, the IRS will pay interest on refunds from April 15, even if the return was filed after that. This could be a significant amount because processing times have been delayed, particularly for paper returns, with millions of unopened envelopes containing returns and payments piling up at service centers. Normally, refund checks include any interest due to the taxpayer, but this year the interest payment may be sent separately.

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