Here's the lowdown
The AICPA asked the IRS to waive certain 2026 estimated-tax underpayment penalties for estates and non-grantor trusts while key Section 68 questions remain unanswered.
The request is narrow. It would not erase tax, and it would apply only when the underpayment came from uncertainty over the new itemized-deduction limit.
Calendar-year fiduciaries face a January 15, 2027 estimated-payment deadline after making their first three 2026 payments without final guidance.
Fiduciaries are stuck between two bad answers
Pay too little, and an estate or trust can face an underpayment penalty.
Pay too much, and the fiduciary may tie up money that should have remained available for beneficiaries. That can create a different problem because fiduciaries must act prudently for both current and future beneficiaries.
The American Institute of CPAs says new federal tax rules have made that choice unusually hard for 2026. It wants the Internal Revenue Service to provide a temporary bridge: waive certain estimated-tax penalties until the government explains how the rule works for estates and non-grantor trusts.
The request does not ask the IRS to forgive anyone's tax bill.
The uncertainty sits inside Section 68
A federal tax law change took effect for tax years beginning after December 31, 2025. It added a new limit under Section 68 on the benefit of some itemized deductions.
For an individual return, the basic idea is already technical. For an estate or non-grantor trust, the calculation runs into a separate set of rules.
The open questions include how Section 68 interacts with the income distribution deduction, the charitable deduction for trusts and estates, and certain administration expenses. Those deductions help determine how taxable income is divided between a fiduciary entity and its beneficiaries.
Without clear guidance, two careful preparers can reach different estimated-payment amounts from the same facts.
The AICPA wants a targeted waiver
In its comment letter, the AICPA asked the IRS to waive underpayment penalties for tax year 2026 to the extent an estate's or non-grantor trust's shortfall resulted from applying the new Section 68 limit to those disputed deductions.
That last phrase does important work.
A blanket waiver could excuse an underpayment for any reason. This request is narrower. It is tied to uncertainty created by the new deduction rule.
The underlying tax would still be due once the correct calculation is known. The requested relief would remove a penalty for getting an unclear estimate wrong.
The fourth payment is getting close
Calendar-year estates and trusts generally make estimated payments during the year. By the time of the request, fiduciaries had already made three 2026 payments without final guidance on the new rule.
The fourth payment is due January 15, 2027.
That date matters because estimated-tax relief is most useful before a preparer has to choose a number. Guidance released after the deadline may settle the return position while doing little to prevent an avoidable penalty or overpayment.
The IRS has granted penalty relief after major tax changes before. The AICPA pointed to earlier transitions involving the Tax Reform Act of 1986, the Tax Cuts and Jobs Act, and the corporate alternative minimum tax.
Those examples show that relief is possible. They do not mean the current request has been approved.
A small income level can create a big fiduciary problem
The AICPA said about 3.2 million fiduciary income-tax returns are filed each year and argued that a substantial majority could feel the Section 68 uncertainty.
Estates and trusts also reach the top federal income-tax bracket at a much lower income level than individuals. For 2026, the source reports that the highest rate begins at just $16,000 of taxable income.
That steep rate schedule makes estimate errors show up quickly. It also raises the stakes of deciding whether a deduction belongs at the entity level, the beneficiary level or both under the governing rules.
A fiduciary cannot solve the tension by always paying the largest possible amount. Overpaying can unnecessarily reduce cash held for remainder beneficiaries. Underpaying can expose the entity to penalties and complaints from income beneficiaries.
Relief is still only a request
For now, advisers have three separate jobs.
First, calculate the estimate using the best support available. Second, document exactly how Section 68 was applied to distributions, charitable amounts and administration expenses. Third, watch for IRS or Treasury guidance before the January payment date.
If relief arrives, that record can help show that any shortfall came from the disputed rule. If relief does not arrive, the same record explains the position taken while guidance was missing.
The AICPA has asked for breathing room. The IRS has not yet supplied it.
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