Automatic 2210 Relief

The IRS recently announced automatic relief for taxpayers who qualified for the retroactive expansion to the exception for the penalty for underpayment of estimated taxes for the 2018 tax year.  Taxpayers who filed their 2018 returns before the IRS expanded the exception to the penalty and who otherwise would have qualified for the exception will automatically receive a refund of the penalty that they paid without having to request the refund.

As discussed in our May 30, 2019 post, in late March of 2019, the IRS announced additional retroactive relief for some taxpayers who might otherwise have been subject to the penalty for underpayment of estimated taxes.  However, since many taxpayers had already filed returns for the 2018 tax year before this additional relief was announced, the late relief created a complication for taxpayers who would have otherwise been eligible for it.

To be eligible for the additional relief provision, a taxpayer’s 2018 federal withholding (and/or timely-paid 2018 estimated tax payments that were made on or before January 15, 2019) had to equal or exceed 80% of the tax shown on the 2018 Form 1040.  (Usually, taxpayers must have payments that equal or exceed 90% of the tax shown on the return, and original relief announced by the IRS on January 16, 2019 reduced the threshold to 85% for the 2018 tax year only.  The additional relief, announced in March of 2019, further cut the threshold from 85% to 80% for the 2018 tax year only.)

In the original guidance provided by the IRS on March 22, 2019, taxpayers who had already filed their 2018 tax returns and otherwise qualified for the additional relief provision were instructed to claim a refund of the estimated tax penalty that they had paid by filing Form 843, Claim for Refund and Request for Abatement.  With the automatic relief that the IRS recently announced, filing Form 843 is no longer required to obtain the refund.