AICPA Applauds Bicameral Letter Urging Extension for Penalty Relief
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AICPA Applauds Bicameral Letter Urging Extension for Penalty Relief

4 months ago · 2 min read

AICPA Applauds Bicameral Letter to Treasury and IRS Urging Deadline Extension for Penalty Relief

Washington, D.C. (September 28, 2022) – The American Institute of CPAs applauded a bicameral letter, led by U.S. Senate Finance Committee Ranking Member Mike Crapo (R-ID) and U.S. House Ways and Means Committee Ranking Member Kevin Brady (R-TX), urging the Department of the Treasury and the Internal Revenue Service (IRS) to extend the deadline for COVID-19-related taxpayer penalty relief from September 30, 2022, to mid- to late-November, 2022.

The letter, signed by eight members of the U.S. Senate Finance Committee and 16 members of the U.S. House Committee on Ways and Means stated, “Extending the relief deadline through mid-to-late November 2022, with whatever appropriate procedural guardrails are determined to be necessary, would provide needed time for more taxpayers to come into voluntary tax compliance without unduly burdening the IRS.”

In late August, the IRS announced it would offer automatic penalty relief to certain taxpayers for taxable years 2019 and 2020. The AICPA promptly submitted a letter conveying gratitude but outlining concerns about the tight deadline of September 30 provided in Notice 2022-36.

“We are grateful that the IRS recognized the need for penalty relief for taxpayers at a time when taxpayers, tax practitioners and the IRS are trying to recover and catch up following three years of a pandemic,” said AICPA Director for Tax Policy & Advocacy, Eileen Sherr, CPA, CGMA. “At a time when practitioners are working to meet the September 30 deadline for trusts and the October 15 deadline for individuals and corporations, it’s just not reasonable to impose another deadline on them. We thank Ranking Members Crapo and Brady, as well as their colleagues, for their quick action in support of extending the deadline.”

Since July of 2020, the AICPA has urged the IRS in multiple letters and statements to provide broad penalty relief to taxpayers who have experienced unprecedented challenges due to the pandemic.


BACKGROUND:

  • On January 10, 2022, the AICPA released a statement calling on the IRS to do more to provide penalty relief to taxpayers

  • Beginning in January 2022, the AICPA joined a coalition of 13 stakeholders urging the IRS to provide meaningful relief to taxpayers, including the following:

    • Align requests for account holds with the time it takes the IRS to process any penalty abatement requests –

      similar recommendation also included in the 2021 National Taxpayer Advocate report

    • Offer a reasonable cause penalty waiver, similar to the procedures of first time abate administrative waiver

    • Provide taxpayers with targeted relief from the underpayment and the late payment penalty for the 2020 and 2021 tax year

  • On March 11, 2022, the AICPA released a statement reiterating the need for penalty relief.

  • On September 1, 2022, the AICPA submitted a letter to Treasury and the IRS conveying gratitude for the actions taken but outlining concerns about the deadline provided in Notice 2022-36.

  • On September 9, 2022, the AICPA submitted a second letter to Treasury and the IRS suggesting several modifications to Notice 2022-36 and requesting that IRS go beyond Notice 2022-36 and issue a further COVID and backlog penalty relief package, providing blanket reasonable cause relief for 2019 and 2020 tax years, including relief for situations where IRS cannot easily identify taxpayers with penalties to be relieved and IRS needs taxpayers to identify themselves for such relief.

Contact: Veronica L. Vera
202-434-9215
Veronica.Vera@aicpa-cima.com

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