Academic journal article Journal of Accountancy

Bill to Restore Estimated Tax Safe Harbor Introduced

Academic journal article Journal of Accountancy

Bill to Restore Estimated Tax Safe Harbor Introduced

Article excerpt

Senator Dale Bumpers (D-Ark.) introduced the Small Business Tax Act of 1993 (S 739), intended to simplify the calculation of estimated tax payments using last year's tax liability.

The bill is intended to resolve hardships created when Congress, in November 1991, repealed the safe harbor certain taxpayers relied on to avoid a penalty for underpaying estimated taxes. It waives penalties if a taxpayer makes estimated payments equal to 100% of the previous year's tax liability.

Since 1992, certain taxpayers have been barred from using the 100% previous tax year safe harbor. Taxpayers with current tax year adjusted gross incomes over $75,000 and current year incomes more than $40,000 higher than the previous year's were singled out and, in effect, required to make estimated tax payments equal to 90% of the current year's tax liability.

Impossible burden. "The November 1991 law did not provide a workable objective standard on which these taxpayers could rely," Bumpers said. "Rather, it set a floating standard based on the current year's tax liability. The repeal of the safe harbor left these taxpayers in an untenable and costly situation. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.