Certain individuals will not be subject to the Sec. 6654 penalty on the underpayment of estimated income taxes if the underpayment is solely attributable to the recent repeal of the excess business loss limitations, the IRS announced this week.
The penalty waiver applies only to calculations of an individual taxpayer’s installments of estimated income tax that were due on or before July 15, 2020, for the tax year that began during 2019.
The relief also applies to any qualifying estate or trust treated as an individual for Sec. 6654 purposes and that is subject to the Sec. 6654 estimated tax payment requirements.
The relief is not automatic. To qualify for the waiver, an individual taxpayer must satisfy all of the requirements described in Section 4.02 of Notice 2021-8, including having timely filed a 2018 original income tax return reporting an excess business loss.