Wallaces Farmer

Iowa Department of Revenue follows IRS in giving farmers more time to file 2018 income tax returns.

Kristine Tidgren

March 6, 2019

3 Min Read
FARMLAND IN IOWA
IT’S OFFICIAL: Farmers who did not make estimated payments for 2018 now have until April 15 to file their federal tax return and pay their taxes without penalty.

The Iowa Department of Revenue announced Feb. 28 that it is granting an extension to the March 1 deadline for farmers to file state income tax returns. This is for farmers who did not make estimated payments by Jan. 15, 2019. These farmers will have until April 30 to file their Iowa returns and pay their income tax without incurring estimated tax penalties.

The notice from Iowa Department of Revenue states: “The Iowa Code and administrative rules allow the director of revenue to provide further time for filing returns if good cause exists, and to waive penalties for underpayments of estimated tax if the underpayment was due to unusual circumstances and imposition would be against equity and good conscience.

“On Feb. 28, 2019, the Internal Revenue Service issued notice 2019-17, which provides an extension through April 15, for farmers and fishermen to make estimated payments before being subject to estimated tax penalties. The director finds that this extension and waiver by the IRS is an unusual circumstance warranting a similar extension and waiver for Iowa income tax purposes.”

Reason for extension
The reason for the extension is the lack of clarity on filing a farmer’s return due to the number of changes in the federal tax law that went into effect for the 2018 tax year. For example, there is quite a bit of confusion in the new tax law if a farmer received payments from a cooperative; the rules aren’t clear on how to handle that income in regard to reporting it for income tax purposes.

IRS announced in Notice 2019-17 an extension to the March 1 deadline for farmers who did not make estimated tax payments by Jan. 15. Under this notice, farmers have until April 15 (April 17 in Maine or Massachusetts) to file their 2018 returns and pay in full any tax due. The notice waives the IRC Section 6654 penalty for failure to make estimated tax payments for these farmers and fishermen, but the relief must be requested.

Attach correct form
Farmers and fishermen requesting the waiver of the addition to tax must attach Form 2210-F, Underpayment of Estimated Tax by Farmers and Fishermen, to their 2018 tax return. The form can be submitted electronically or on paper.

The taxpayer’s name and identifying number should be entered at the top of the form, and the waiver box (Part I, Box A) should be checked. The rest of the form should be left blank. On March 1, IRS issued a correction to its original announcement and provided updated instructions for Form 2210-F.

If a farmer has already filed a return but wishes to take advantage of the extension to delay payment to April 15, an amended return can be filed with the Form 2210-F attached. According to IRM 21.6.7.4.10, such an amendment (filed before the due date of the return) is considered a superseding return and will be processed as such. In other words, the taxpayer should be able to delay payment and avoid the penalty. Waiting for an IRS notice of deficiency and responding with a request for relief may not yield the same result.

Indications are IRS may issue additional guidance to help farmers prepare their income tax returns for 2018 tax year. We will keep you updated at calt.iastate.edu.

Tidgren is an attorney and director of the Center for Ag Law and Taxation at Iowa State University. Contact her at [email protected].

About the Author(s)

Kristine Tidgren

Kristine Tidgren is staff attorney and assistant director for the Center for Ag Law and Taxation at Iowa State University.

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