On May 23, 2019, the Kentucky Department of Revenue (Department) announced that it will provide transitional penalty relief related to the recent adoption of revised estimated payment rules enacted on March 26, 2019, as part of House Bill 354 (HB 354).

Effective January 1, 2019, HB 354 aligns Kentucky's individual income, corporation income, limited liability entity and nonresident withholding estimated tax filing rules with those followed by the Internal Revenue Service. By aligning with the federal rules, calendar-year taxpayers were faced with an estimated payment deadline of April 15, 2019, instead of the later date that existed under prior law. The Department said in the announcement that it will waive penalties from the imposition of the 110% current tax year estimated tax safe harbor. However, taxpayers must comply with the 100% prior tax year safe harbor. The Department will be updating various forms and instructions to reflect this transitional relief.

Implications

Taxpayers should consider whether they are potentially subject to penalties for underpaid estimates and if this transition relief applies.

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