Responding to Senate Dems’ Letter, Trump Treasury Department Admits it Under-Withheld Taxes from More Taxpayers in 2018, but Refuses to Waive Resulting Penalties Taxpayers Could Now Face
Washington, D.C. – Responding today to a letter sent by Senate Finance Committee Ranking Member Ron Wyden, D-Ore., Senate Democratic Leader Chuck Schumer, D-N.Y. and 38 additional Senate Democrats, the Treasury department admitted that its implementation of the new Trump tax law increased the number of taxpayers whose taxes were under-withheld, but it declined to take further steps to waive penalties for all those who underpaid by no fault of their own.
“Let’s call it what it is, this is tax penalty entrapment,” Senator Wyden said. “First the Trump administration chose to under-withhold taxes from millions more Americans than is typical, and now the administration could sock a whole lot of unsuspecting people with penalty fees for underpayment. This same Trump tax law that handed hundreds of billions of dollars to corporations and billionaires is now a source of enormous financial anxiety for America’s middle class, and still the Trump administration expects them to be grateful. There is no good reason to inflict these fees on people who didn’t game the system. It shouldn’t surprise anybody, but they just don’t get it.”
With nearly a month of tax filing season having passed, reports are mounting that many Americans who typically receive tax refunds are learning they were under-withheld. Some are receiving smaller refunds, others owe the government money and potentially face penalties for underpayment. Senator Wyden, Leader Schumer and their Senate Democratic colleagues sent their letter to Secretary Mnuchin on February 15th asking for the Treasury Department to waive those penalties for taxpayers who did not attempt to game the system in any way. The Treasury Department’s response, written by a senior advisor in the Office of Legislative Affairs, admitted that the Trump administration’s implementation of the new tax law was responsible for the increase in under-withholding and the evaporation of the tax refunds many Americans count on each spring, but it declined to take any further steps to protect Americans from penalties for underpayment. The Treasury Department letter is available here.