Refunding Underpayment Penalties??

[Corduroy Frog]

Drake will calculate a penalty for underpayment of estimated taxes, and add it to the amount due (or reduce refund).  I can override the calculation, but usually let it stand unless there is a compelling reason to remove it.  Helps cut down on ugly collection letters in the summer.

This year, three of my customers have had this penalty refunded to them.  And maybe more that haven't told me.

Has something happened with the IRS that I am not aware of?  Is this a COVID gift to taxpayers?  Have the regulations given relief? 

Thanking you in advance for comments - "Corduroy Frog".

[Corduroy Frog]

Replying to my own message to bump it up.  I would have thought others have experienced refunds of underpayment penalties...

[jklcpa]

I'm not sure if this is your issue or not, but IRS refunded 2018 underpayment penalties when the taxpayer was eligible for the waiver but didn't request it on the return before the waiver became automatic. The change to automatic waiver wasn't implemented by IRS until mid-Aug last year, so not sure how quickly some taxpayers would have received the refund. I think one of my clients may have received a refund.  Do you know which year your clients' penalty refunds were for?

https://www.journalofaccountancy.com/news/2019/aug/tax-underpayment-penalty-relief-now-automatic-201921833.html

https://www.irs.gov/newsroom/irs-automatically-waives-estimated-tax-penalty-for-eligible-2018-tax-filers

[Corduroy Frog]

Thanks Judy.  This is relevant enough to answer the question.

IRS, in their characteristic ambiguity, has obviously not covered all the bases, but I believe there is enough to explain why some taxpayers are having their estimated penalties refunded.