Published : Wednesday, March 6, 2019 | 2:27 PM
Wednesday, Senator Kirsten Gillibrand (D-NY) introduced the Senate version of H.R. 1300, the Taxpayer Penalty Protection Act, a companion to the bill introduced by Rep. Judy Chu (CA-27) in the House of Representatives.
The Taxpayer Penalty Protection Act would shield taxpayers from withholding penalties for the 2018 filing year should they find themselves to be under-withheld due to the rushed changes made in the Republican tax law. Because of the new IRS withholding tables, and the fact that many taxpayers did not adjust their withholding, GAO found that 30 million filers, or 1 in 5 taxpayers, will find that they owe the IRS this year. Last year, H&R Block found that only 1 in 5 people adjusted their Form W-4 after passage of the law. On January 16, 2019, the IRS expanded penalty relief for all taxpayers who paid at least 85% of their tax due for the current year. However, as filing season has begun, experts agree that further relief is needed. This bill creates a one-time safe harbor to protect individuals and small businesses against the Failure to Pay Estimated Tax Penalty under IRC 6654 if the amount of taxes paid is at least 80% of the taxes owed for all taxpayers in the current year. Rep. Chu and Sen. Gillibrand issued the following statements:
“Tax reform should help grow the middle class, but it’s clear from the stories we’ve heard so far this tax filing season that those middle class families are the ones stuck with a bill instead of the refund they were expecting,” said Rep. Chu. “This is through no direct fault of their own, as many relied on their previous withholding calculations and IRS’s updated withholding tables to ensure they paid their tax liabilities. This bill will make a necessary fix to provide relief to those taxpayers who are subject to under-withholding penalties. I’m so appreciative to have a partner like Senator Gillibrand to help lead the way on this bill in the Senate. I hope we can move quickly to pass this legislation and get taxpayers the relief they need this filing season.”
“It’s clear that the Trump tax law was a giveaway to the biggest corporations and the richest Americans at the expensive of hardworking families all over our state. Now that tax filing season is here, I am hearing from families all over New York that their year-end tax bill is higher than normal, and they are getting hit with a penalty because the Trump Administration told them to withhold less money than they were supposed to,” said Senator Gillibrand. “Congress needs to get to the bottom of whether this was a deliberate and deceptive act by the Trump Administration to make its tax law look better than it actually is, but in the meantime, no one playing by the rules should have to pay a penalty because of this Administration’s incompetence or dishonesty. I’m proud to introduce the Taxpayer Penalty Protection Act, which would erase the penalties for taxpayers who were under-withholding at no fault of their own. I urge all of my colleagues to support this bill, and I will always fight to make sure hardworking New Yorkers and all Americans have every opportunity to succeed.”
This bill is endorsed by the non-partisan American Institute of Certified Public Accountants.