FAQs for Hurricane Victims - Estimated Tax Payments
(8/25/06) Q: Are the 2005 estimated tax payments which were due originally on September 15, 2005 and January 15, 2006 due on August 28, 2006 or October 16, 2006? How will the estimated tax penalty be computed on Form 2210? What dates should be used? If the return is filed by August 28th, do you send in estimates separately?
A: On August 25, 2006 the IRS announced the postponement of the estimated tax payment deadlines to October 16. Specific instructions for reporting any underpayment of estimated tax due for Tax Year 2005 can be found in the Instructions for Form 2210. You may request a waiver of the penalty if the underpayment was caused by Hurricane Katrina. Instructions for requesting the waiver of the penalty can also be found on page 2 of the Instructions for Form 2210.
(9/13/06) Q: Does the postponed deadline for estimated tax payments apply to both individual and business taxpayers?
A: Yes. IRS News Release IR-2006-135 provided a postponement of time to make estimated tax payments. As the IRS did not postpone the time for individuals to make estimated tax payments when it provided additional time to file certain individual income tax returns in IRS News Release IR-2006-96 (June 19, 2006), and IR-2006-135 provided relief for businesses, there has been confusion over whether the postponement in IR-2006-135 applies to corporate estimated taxes only or to both individual and corporate estimated taxes. The postponement applies to both individuals and corporations who are affected taxpayers.
The definition of affected taxpayer for purposes of IR-2006-135 is the same as that used in Notice 2006-20, 2006-10 I.R.B. 560 (March 6, 2006), and includes taxpayers whose principal place of business or residence, or whose tax records or tax professional’s office were located in one of the counties or parishes listed in IR-2006-135.
(10/6/06) Q: If we pay a client's 2005 taxes due by 10/16/06 on a Form 4868, is there risk of a 2210 penalty that would not exist by sending in a check with a 2005 estimated voucher instead? Are the funds earmarked by the voucher number?
A: There is no increased risk of an estimated tax penalty by sending a check with 2005 estimated voucher. Taxpayers who choose to send a payment with Form 4868 should write their social security number, daytime phone number, and “2005 Form 4868” on the check or money order. The payment should be sent to the address shown in instructions to Form 4868 under the section “Where to File a Paper Form 4868.”
The IRS has taken steps to automatically waive the estimated tax penalty for affected taxpayers located in the following areas: Louisiana: Cameron, Jefferson, Orleans, Plaquemines, St. Bernard, St. Charles, and St. Tammany parishes; and Mississippi: Hancock, Harrison and Jackson counties.
Affected taxpayers located outside the areas listed above are encouraged to self identify by calling the IRS Disaster Hotline at (866) 562-5227 or by marking in red ink “Hurricane Katrina” on the top of the return and Form 2210.
The IRS has taken steps to ensure taxpayers’ accounts are accurately processed. However, taxpayers should call the Disaster Hotline or respond in writing to request abatement of any penalties erroneously assessed.
(10/6/06) Q: Should 2006 estimated taxes be submitted with the 1st, 2nd and 3rd quarter vouchers rather than the 3rd quarter voucher only?
A: The estimated tax payments due for the 1st, 2nd, and 3rd quarter 2006 may be submitted with the 3rd quarter voucher.