Washington, D.C. (November 5, 2026) – In a letter to the Department of the Treasury and the Internal Revenue Service (IRS), the American Institute of CPAs (AICPA) is calling on the tax administration to waive certain estimated tax penalties for estates and non-grantor trusts for tax year 2026 because taxpayers and practitioners still lack guidance on how the new limitation on itemized deductions applies to such taxpayers.
The new limitation, enacted as part of the One Big Beautiful Bill Act, took effect for tax years beginning after Dec. 31, 2025. However, questions remain about how the provision interacts with the tax rules that specifically govern estates and trusts, making it difficult for fiduciaries and tax practitioners to accurately calculate estimated tax payments.
“Taxpayers and practitioners are working in good faith to accurately calculate their estimated tax obligations under the new section 68 limitation, but key questions about how it applies to estates and trusts remains open,” said Daniel Hauffe, senior manager for tax policy and advocacy with the AICPA. “The IRS has provided relief in the past when significant tax law changes created uncertainty around estimated tax obligations. We believe similar relief would offer a practical bridge until that guidance is issued.”
In the letter, the AICPA asks the IRS to waive penalties for underpayment of estimated income tax by estates and non-grantor trusts for 2026 to the extent the underpayment results from application of the new itemized deduction limitation to several deductions applicable to estates and trusts, including the income distribution deduction, charitable deduction and certain administration expenses. The AICPA has previously requested guidance from Treasury and the IRS on these issues.
The approaching Jan. 15, 2027, deadline adds urgency to the need for relief, as fiduciaries for calendar-year estates and trusts have already made three estimated tax payments for 2026 without clear guidance on how the new rules apply.
The IRS has previously provided estimated tax penalty relief following significant changes in tax law when taxpayers did not have sufficient guidance to accurately determine their obligations. Examples cited in the letter include relief following changes under the Tax Reform Act of 1986, the Tax Cuts and Jobs Act and the more recent corporate alternative minimum tax rules.
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education, and consulting. A founding member of the Association of International Certified Professional Accountants, the AICPA sets ethical standards for the profession, attestation standards, and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state, and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, partners across the profession to build future talent, and drives continuing education to advance the vitality, relevance, and quality of the profession.
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Contact: Veronica L. Vera
202-434-9215
Veronica.Vera@aicpa-cima.com