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At Request of Rep. Chu, Treasury Waives Underpayment Penalty for More Americans

March 22, 2019
Press Release

WASHINGTON, D.C. – The Treasury Department today announced that it would waive the under-withholding penalty for taxpayers who paid at least 80% of their taxes, down from the current 85%. The announcement follows a commitment Treasury Secretary Steve Mnuchin made to Rep. Judy Chu (CA-27) in a Ways and Means Committee hearing last week to respond to her request for this relief. That request was also made in a February 12th letter, sent with Rep. John Lewis (GA-05), which followed a similar request sent in July of 2018 with 12 other Democratic members of the Ways and Means Committee urging the IRS to grant this relief. Rep. Chu also re-introduced H.R. 1300, the Taxpayer Penalty Protection Act, legislation that would have lowered the penalty threshold to 80% had Treasury not acted. Senator Kirsten Gillibrand (D-NY) introduced companion legislation in the Senate this year. Rep. Chu issued the following statement:

“Families depend on their tax refunds each year to pay down bills, make ends meet, and save for the future. But this year, the reality for many is much different as they are shocked to discover they owe hundreds or thousands of dollars to the IRS through no fault of their own, and could even face penalties. I have been concerned about this issue since the passage of the Republican tax law. That’s why I introduced the Taxpayer Penalty Protection Act, to waive this penalty for more taxpayers. Even Nina Olsen, the National Taxpayer Advocate, confirmed to the House Ways and Means Committee that the confusion created by the new tax law could lead to many taxpayers facing a penalty and urged the government to act. As tax filing season is in full swing, Treasury’s action will relieve the financial anxiety facing worried taxpayers across the country. I am glad that Secretary Mnuchin responded to my request and acted in accordance with my legislation to make this change.”