Now that the extended deadline for the 2021 tax season has passed, the AICPA is turning its attention to potential penalties and collection activities, asking the IRS and the U.S. Department of the Treasury to consider specific penalty relief measures for millions of taxpayers affected by the COVID-19 pandemic.
Citing the difficulty some tax practitioners have faced in trying to complete clients’ returns, as well as ongoing communication issues with the IRS, the association is asking both agencies to consider several relief measures, including:
- Underpayment and late payment penalty relief, specifically for taxpayers who paid at least 70% of the tax due for the current year or paid 70% of the amount of tax shown on their U.S. income tax return for the prior year, and who make a timely request for a filing extension.
- A reasonable cause waiver that does not impact a taxpayer’s eligibility for a first-time abatement waiver in future tax years.
- A delay in IRS collections until the agency is caught up on dealing with such matters, or at least 90 days after the May 17 filing deadline.
- An alignment of account hold requests with the time it takes the IRS to process any penalty abatement requests.
“A fair and equitable tax administration system should help all taxpayers meet their tax obligations, regardless of the simplicity or complexity needed to meet their tax obligations,” writes AICPA tax executive committee chair Chris Hesse in the association’s letter to the IRS and Treasury. “To lessen the burdens of the unprecedented challenges created by the coronavirus for everyone in the tax system, including the IRS, further penalty relief measures are needed.