Wyden, Schumer & Senate Dems: Americans Facing Surprise Tax Bills Should Not be Penalized for Treasury's Withholding Mistakes

Treasury Cut Withholding in 2018, Resulting in Americans Facing Surprise Tax Penalties this Filing Season, Dems Want Fines Waived for Working Taxpayers Who Underpaid by No Fault of Their Own

Washington, D.C. – Senate Finance Committee Ranking Member Ron Wyden, D-Ore., Senate Democratic Leader Chuck Schumer, D-N.Y., along with 38 other Senate Democrats today wrote to the administration calling for the IRS to waive penalty fees associated with surprise tax bills many working Americans are facing due to actions taken by the Treasury in early 2018. Following the enactment of the new Trump tax law, the Treasury Department chose to under-withhold taxes from nearly 30 million taxpayers, according to a GAO estimate, millions more than are under-withheld in a typical year. With tax filing season now underway, there are mounting reports that many Americans who traditionally count on receiving tax refunds are learning they were under-withheld and owe the government money, potentially including penalties for underpayment. This financial shock for millions of taxpayers didn’t have to happen. The Treasury had a year to adjust withholding tables to reflect changes in the new tax law, but they rushed out the changes in January 2018, just weeks after the law passed.

“It looks like the Trump Treasury Department spent 2018, an election year, goosing people’s paychecks by under-withholding, and it should have been obvious that the bill would come due eventually,” Senator Wyden said. “The Trump administration might want to push responsibility for this issue onto taxpayers, but it’s unreasonable to expect working people with busy lives to start the year out by crunching the numbers on their tax withholding with the rigor of a workaholic CPA. This threat that families will face surprise tax bills and penalty fees is another perfect example of how the Trump tax law is unfair to typical Americans. Corporations and the billionaires got huge handouts from the Trump tax law, and working people got a new source of financial anxiety. The Treasury Department needs to waive these penalties for those who underpaid by no fault of their own.”

“Many Americans depend on their tax refund to pay bills and make ends meet – but this tax season, working families will see smaller than expected returns and surprise tax bills because the Trump administration used smoke and mirrors in a shallow attempt to exaggerate the impact of their tax law on middle class families for political reasons. The unacceptable actions by President Trump’s Treasury Department, potentially hurting nearly 30 million taxpayers, comes while corporate executives and the wealthiest few continue to enjoy their tax windfall from the GOP’s tax scam. Instead of a real effort to address the Trump administration’s mess, the IRS is attempting to cut the grass with scissors—when they clearly need a lawn mower. It is incumbent on the Trump administration and the IRS to waive tax penalties incurred as a result of the Administration’s actions,” said Senate Democratic Leader Chuck Schumer.

The full letter to Treasury Secretary Mnuchin and IRS Commissioner Rettig can be found here.

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