Penalty and Filing Relief on Foreign Earnings Transition Tax

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Penalty and Filing Relief on Foreign Earnings Transition Tax

Posted by Kim Chen on July 18th, 2018

In a recent News Release, the IRS announced that it will waive certain late payment penalties related to the IRC Sec. 965 transition tax. The announcement also includes information related to the due date for relevant elections. The relief information was explained in three new FAQs posted on the IRS’s tax reform page. The FAQs provide that: (1) the estimated tax penalty related to the transition tax will be waived in some instances if all the required estimated tax payments are made by 6/15/18; (2) the late payment penalty will be waived for those who missed the 4/18/18 deadline for making the first of the eight annual installment payments if the installment is paid in full by 4/15/19, and the total transition tax liability is less than $1 million; and (3) individuals who have already filed their 2017 tax return without making an election to pay the transition tax over eight annual installments can still make the election by filing an amended tax return by 10/15/18. News Release IR 2018-131.