Estimated tax underpayment penalties under Code Sec. 6654 are waived for certain excess business loss-related payments for tax years beginning in 2019. The relief is available to individuals, as well as trusts and estates that are treated as individuals for estimated tax payment penalty purposes.
Certain business losses were limited in tax years beginning in 2017 through 2025 by the excess business loss rules of Code Sec. 461(l). Under these rules, any disallowed excess business losses are carried forward as net operating losses (NOLs). The Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136) postponed application of the excess business loss rules to tax years beginning after December 31, 2020.
Relief for 2019
The relief is available only for estimated tax income tax installments due on or before July 15 2020 for a tax year that began in 2019.
An individual taxpayer may have underpaid one or more installments for the tax year that began in 2019, if the individual anticipated having a lower required annual payment after using an NOL carried forward from a prior-year excess business loss that, before the enactment of the CARES Act, would have been available to reduce taxable income in the tax year that began in 2019.
To qualify for the relief, the taxpayer must:
- have filed a timely 2019 federal income tax return;
- complete the 2019 version of Form 2210, Underpayment of Estimated Taxes, or Form 2210-F, Underpayment of Tax for Farmers and Fishermen; and
- include certain required attachments and calculations.