The IRS is offering some relief to taxpayers trying to reconcile their 2014 income tax return with a surplus of advance health insurance premium tax credits.
The agency this week offered some relief from late payment and estimated tax fees when a taxpayer discovers that they have a balance due on their 2014 taxes, due to the premium tax credits. Of course, the taxpayer is responsible for the balance due, plus interest if not paid by April 15, but the waiver eliminates the additional penalties for failing to plan ahead for the excess tax. The waiver of the poor planning penalties only applies to the 2014 tax year.
Specifically, in the same manner that taxpayers reconcile their tax withholding with their actual tax liability and get refunds or make an additional payment accordingly, individuals benefiting from tax credits for Marketplace coverage will follow the same process. Normally, taxpayers may owe certain penalties for late payments or underpayment of estimated tax. However, to help smooth the process for the first year of the Affordable Care Act, the IRS will waive these penalties for eligible taxpayers if they resulted from repayment of excess advance payments of the premium tax credit for Marketplace coverage. Learn more about Notice 2015-09, Penalty Relief Related to Advance Payments of the Premium Tax Credit for 2014 (Jan. 26, 2015), on the IRS Premium Tax Credit page. This has no effect on the fee individuals will pay if they chose not to buy affordable health coverage.
Question: Notice 2015-9, Penalty Relief Related to Advance Payments of the Premium Tax Credit
If a taxpayer has both underpayment penalties attributable to the APTC and normal underpayment of estimated tax, does the existence of the APTC underpayment abate all 6651 (a)(2) and 6654 penalties on the return, or just those attributable to the APTC?
It abates all of the 6654 estimated payment, but for FTP it only abates the penalty assessed with the original return. It will not abate penalty for 6651 (a) (3).