Daily Tax Update - February 13, 2007

IRS TO WAIVE ESTIMATED TAX PENALTY FOR US CITIZENS OR RESIDENTS LIVING AND WORKING ABROAD: Today, the IRS and Treasury Department released guidance on the estimated tax penalty for citizens or residents of the United States living and working abroad. Notice 2007-16 explains the changes made by the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) to the foreign earned income exclusion and housing cost amount under section 911. TIPRA changes to section 911 were enacted in May 2006, but they are effective retroactive for tax years beginning January 1, 2006. Individuals relying on the existing law before the retroactive change may have underpaid their 2006 estimated tax liabilities. Notice 2007-16 provides that, under certain circumstances, the IRS will waive section 6654 penalties for underpayment of estimated tax by certain citizens and residents of the United States living abroad.



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