Taxes CPA

Glendale CPA | IRS Penalty Relief

The IRS has announced that they will provide relief from tax penalties taxpayers receive from an over payment they received from the premium tax credits for buying health insurance under the affordable care act. Notice 2015-09 allows for limited relief for taxpayers who have a balance due on their 2014 income tax return due to the difference between the premium tax credit they received throughout the year and the premium tax credit allowed on the income tax return. The notice states specifically that taxpayers must meet certain requirements and the relief is only available for the 2014 income tax year.

Many taxpayers are finding that their tax refunds are being effected drastically by the premium tax credit. If a taxpayer underestimated their income when applying for the health insurance policy, they could find themselves owing the IRS hundreds of dollars in premium tax credit that they shouldn’t have received. It also works the other way if a taxpayer overestimated their income, they could receive a substantially larger refund.

The IRS has said they would abate the penalties for taxpayers who meet the following conditions:

  1. Taxpayer must be current with their filings and payment obligations with the IRS
  2. Taxpayer must have a balance due for the 2014 income tax year due to excess advance payments of the premium tax credit
  3. Taxpayer must report the amount of excess advance credit payments on their 2014 tax return

The IRS will automatically assess the penalty and issue a notice demanding payment of the penalty. The taxpayer should respond to the notice with a letter that contains the statement “I am eligible for relief granted under Notice 2015-09 because I received excess advance payment of the premium tax credit.”

If you have any questions, feel free to contact us at Dusseau & Makris, PC, your Phoenix CPA firm.