Relief for Late Payment Penalties for 2012 Tax Returns

Most farmers are aware that the IRS allowed filing of their income tax return this year by April 15 instead of the normal March 1 “farmer” filing deadline.  What many farmers may not know is if they extended their tax return and ended up paying additional income tax after April 15, they may not owe the late payment penalty that will be assessed by the IRS.

In Notice 2013-24 issued by the IRS on April 15, 2013, relief from the late payment penalty was extended to any farmer who:

1. Extended their income tax return timely,
2. Properly estimated their income tax liability using available information, and
3. Reported that tax liability on their extension.

Any resulting tax liability owed should have been paid in with the extension, however, in many cases, additional tax will be owed and the late penalty will be assessed.  However, 2012 tax year filings were unique due to the late release of many income tax forms that farmers commonly use (such as form 4562, Depreciation, form 8903 Domestic Production Activities Deduction, etc.).  Therefore, this Notice allows taxpayers who prepared and filed their extension correctly to get relief from any late penalty charged as long as one of the forms listed in this notice was part of that tax return.  One of these forms will almost be in every farmer’s return.

This means that if you filed after April 15 and got a notice from the IRS owing late payment penalties, you should be able to either not pay the penalty by following the Notice’s procedures or send a letter to the IRS asking them to abate the penalty and provide a refund to you.

The 2012 tax filing season is probably the most unusual season I have ever been involved with and I am happy to see it done, however, there is some good news for farmers in certain situations such as the one in this post.

Paul Neiffer, CPA