Although the IRS recently released guidance offering relief to taxpayers who were unable to pay their 2019 tax obligations by making it easier to set up payment agreements, the AICPA is advocating for further penalty relief amid the ongoing COVID-19 pandemic.
In order to avoid failure-to-file penalties, taxpayers must show that such failure was due to reasonable cause and not willful neglect, allowing for a waiver of the penalties. However, the AICPA maintains that this penalty abatement process is burdensome for the taxpayer, the practitioner and the IRS.
In its recent letter to the Department of the Treasury and the IRS requesting penalty relief for the 2019 tax year filing season, the association urges the IRS to provide a penalty waiver and create an expedited and streamlined reasonable cause penalty abatement process that eliminates the need for written requests; to develop specific coronavirus examples that qualify for reasonable cause abatement; and to develop a dedicated telephone number, or dedicated prompt, for taxpayers or their advisors to call to request pandemic-related penalty relief.
“Though we have had conversations with the IRS, we are greatly disappointed that the IRS has yet to step in to provide the additional help to taxpayers and their advisors that could make a tremendous difference,” says AICPA vice president of taxation Edward Karl. “We believe the IRS understands the unprecedented nature of this tax filing season and are hopeful that they will issue guidance granting broader penalty relief to taxpayers during this time.”