No Estimated Tax Penalty for All Farmers Who File and Pay by April 18
In that post we indicated that the IRS would issue further guidance on how to get this relief. We also thought that the guidance would only apply to farmers who needed to file a Form 7203 to report their tax basis in their S corporation stock.
We have finally gotten the guidance and it is very favorable to all farmers. In Notice 2022-13, the IRS does indicate the issue with Form 7203 E filing problems, however, the Notice then indicates that all farmers will qualify for the relief as long as they file and pay their tax by April 18 (April 19 for Maine and Massachusetts farmers).
There is no special form and wording to indicate on the return. You simply file and pay the tax by April 18 and indicate to the IRS you are qualifying farmer (usually by filing Form 2210-F).
If you had filed after March 1 AND paid an underestimated tax penalty, you can request a refund by filing Form 843. You will need to perform the following requirements:
- Write “Request for Relief under Notice 2022-13” at the top of Form 843.
- Enter “6654” on line 4.
- Check the third box on line 5a.
- On line 5b, show the dates of any payment of tax liability and addition to tax under section 6654 for the tax period involved.
- On line 7, state why the taxpayer’s circumstances satisfy the criteria for relief under this notice. Generally, this would include the status of the taxpayer as a qualifying farmer or fisherman, filing a 2021 tax return, and paying in full any tax due on the return by April 18, 2022, or, for those taxpayers who live in Maine or Massachusetts, by April 19, 2022.
If your penalty paid was less than $100, filing a request for this relief may not be practical. Also, be forewarned that this refund process may easily take over a year before you get the refund and may involve getting two or three letters from the IRS indicating they are processing it. These letters are never fun to receive.
We are not sure if this blog helped in getting this relief but it will be helpful for many farmers.
However, the bottom line as indicated in many other posts is to get out of the habit of filing and paying by March 1. It is almost always better to pay your estimated tax payment on January 15 and then take proper time to file and pay the remaining tax by April 15.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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