Reminder about 2210 Relief

As discussed in our March 26, 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.

As a reminder, 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 further cut the threshold from 85% to 80% for the 2018 tax year only.)

Now that that the April 15 filing due date has passed, practitioners can assess the effect of this change on 2018 returns that had been filed prior to the announcement of the additional relief.  Tax software often provides a tool to determine which clients were affected by this additional relief provision.

Taxpayers who had already filed their 2018 tax returns and otherwise qualified for the additional relief provision can claim a refund by filing Form 843, Claim for Refund and Request for Abatement.  Filers of this form should include the statement “80% Waiver of estimated tax penalty” on Line 7.  Form 843 cannot be filed electronically, so it must be filed on paper.

Practitioners will need to assess the effect of this change on the returns of affected clients to see if it is cost beneficial to claim the additional relief by filing Form 843.