IRS penalty waiver for those who overpay taxes by 25 percent
H.R. 990 — SAFE Act · Filed by Judy Chu (D-CA) · 1 cosponsor · Introduced Feb 5, 2025 · Referred to committee
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What it does
This bill allows individual taxpayers to avoid IRS penalties for late payment of income tax in a given year if they pay 125% of their prior year's tax liability by the payment deadline. The benefit flows to taxpayers who would otherwise face penalties; the mechanism is a safe harbor that trades a modest overpayment (25% extra) for penalty forgiveness.
Why we flagged it
The bill creates a voluntary penalty-avoidance mechanism for individual taxpayers by allowing them to satisfy payment obligations through a formulaic overpayment tied to prior-year liability. It is a compliance tool, not a tax cut or subsidy—the taxpayer still pays the full current-year tax plus 25% extra.
What the text implies
- Taxpayers with declining income may face a penalty trap: if income drops sharply, paying 125% of prior year's tax may exceed current-year liability, creating overpayment and refund-processing delays.
- The safe harbor applies only if the taxpayer files a return for the current year by the deadline; failure to file disqualifies the exception, so the benefit is conditional on timely filing compliance.
- Joint filers face complex reconciliation rules if filing status changes between years, potentially creating confusion about which spouse's prior-year liability applies.
Section numbers refer to the bill text the analysis read — linked under Primary records below.
Who it affects
Individual taxpayers gain a concrete compliance option: they can avoid penalties by paying 125% of prior-year liability, which is predictable and manageable for those with stable or rising income. The 25% overpayment is a cost, but it is voluntary and transparent—taxpayers choose it to avoid penalties. The bill does not restrict rights or protections; it expands a safe harbor.
Who stands to gain
- Individual taxpayers with stable or rising income
- Tax preparation and compliance software providers (potential indirect benefit from increased safe-ha
Named in the bill
Internal Revenue Service (IRS), Individual taxpayers, IRC Section 6651(c), Secretary of the Treasury
Where it stands
1 cosponsor: 1 Republicans.
- Feb 5, 2025 — Introduced · Congress.gov: “Introduced in House”
- Feb 5, 2025 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”
Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.
Money around this bill
2 lobbying clients named this bill on 3 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $1,889,000 in lobbying spend. A filing names 12 bills on average, so that figure is what each filing reported, not a share belonging to this bill.
More lobbying clients named this bill than 41% of bills with at least one filing.
Judy Chu, the sponsor, reported $430,500 in PAC receipts in the 2026 cycle.
- Aicpa Association of International Certified Professional Accountants — $1,449,000 on 1 filing
- Leading Builders of America — $440,000 on 2 filings
Lobbying Disclosure Act filings through Jul 1, 2026. A filing shows who paid to lobby on a bill it names, not what changed.
How this was measured
Analysis — Quorum's AI read the bill text published by Congress.gov (2,702 characters) on Oct 31, 2026. Section numbers in the findings refer to that text, linked below; transparency and hidden-provision scores are compared against the median of 16,778 analysed bills.
Status and sponsors — Congress.gov's bill record — actions, committee referrals and cosponsors — loaded nightly. The timeline shows status changes, not every procedural action.
Money — Senate Lobbying Disclosure Act filings whose specific-issue field names this bill for quarters ending Dec 2025 to Jun 2026. A filing's amount is reported whole beside the median number of bills a filing names; it is never divided across them. PAC receipts are FEC-reported contributions to the sponsor's candidate committee in the 2026 cycle.
As of — lobbying records through Jul 1, 2026 · page rendered 2026-10-31.
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