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Penalty relief available for repatriation tax payments

June 06, 2018

The IRS has announced that it will not be imposing estimated tax and late-payment penalties for certain individual taxpayers who failed to make sufficient estimated tax payments or failed to meet the April 18, 2018, payment deadline for the first repatriation tax installment. (IR 2018-131) The relief is not available to corporate taxpayers. Corporate taxpayers who failed to meet deadlines will have to seek first-time penalty abatement or reasonable cause penalty abatement.

The following relief is provided to eligible taxpayers:

  • The estimated tax penalty will be waived for taxpayers who improperly attempted to apply a 2017 calculated overpayment to their 2018 estimated tax, as long as
    • They make all required estimated tax payments by June 15, 2018; and
    • Their first required installment was due by April 18, 2018.
  • For individual taxpayers with a total repatriation tax liability of less than $1 million who missed the April 18, 2018, deadline for making the first of the eight annual installment payments, the IRS will waive the late-payment penalty if the taxpayer makes a timely election and pays the installment in full by April 15, 2019 (June 17, 2019, for taxpayers living outside the U.S.) and will not require that all future installments be paid immediately.
  • Individuals who have already filed a 2017 return without electing to pay the repatriation tax in eight annual installments can still make the election by filing a 2017 Form 1040X with the IRS. The amended Form 1040 generally must be filed by October 15, 2018.
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