Taxpayers Filing Delayed Forms Get Late-Payment Penalty Relief

On Wednesday, the IRS announced that it will waive the penalty normally assessed for late payment of income tax, for taxpayers who have requested an extension of time to file their return and who are filing one of the 31 forms that were delayed until March because of the last-minute tax law changes in the American Taxpayer Relief Act of 2012, P.L. 112-240 (Notice 2013-24, which also contains a list of the 31 forms). But the IRS also warns that such taxpayers may receive an automatic assessment notice and demand for payment.

The IRS believes the late issuance of those 31 forms may prevent some taxpayers from being able to timely estimate and pay their 2012 tax liability when requesting an extension to file. Under the relief, the IRS will assume the taxpayer has demonstrated reasonable cause and lack of willful neglect if he or she makes a good-faith effort to properly estimate the tax liability on the extension application, the estimated amount is paid by the original due date of the return, and any tax owed on the return is fully paid no later than the return’s extended due date.

Because the IRS automatically assesses the Sec. 6651(a)(2) late-payment penalty, relief under this notice is obtained by responding to the penalty assessment notice in a letter, explaining the taxpayer’s eligibility for the relief, identifying which of the forms eligible for relief were included with the taxpayer’s return, and referring to Notice 2013-24 in the letter.

In February, Jeffrey Porter, chair of the AICPA’s Tax Executive Committee, requested in a letter on behalf of the AICPA that the IRS consider penalty relief for taxpayers due to the delay of the 31 forms, which included forms for education credits and depreciation (see “AICPA Raises Concerns About Delayed, Compressed Tax Season”).