Individual farmers and fishermen are subject to special rules under IRC §6654(i)(1)(A) & (B) that exempt them from an underpayment penalty under §6654 if they make a single estimated tax payment in the amount due by January 15 of the year following the year the taxes are due. However, under IRC §6654(i)(1)(D) these individuals get a second chance if they miss that January 15 date for their one estimate. They are still not subject to an underpayment penalty if they file their return by March 1 of the year following the year in question and pay the resulting tax.
IRC §6654(i)(2) defines “farmers and fishermen” for this purpose as follows:
(2) Farmer or fisherman defined An individual is a farmer or fisherman for any taxable year if—
(A) the individual’s gross income from farming or fishing (including oyster farming) for the taxable year is at least 66⅔ percent of the total gross income from all sources for the taxable year, or
(B) such individual’s gross income from farming or fishing (including oyster farming) shown on the return of the individual for the preceding taxable year is at least 66⅔ percent of the total gross income from all sources shown on such return.
This year the farmers and fishermen were granted an extension on that March 1 due date by Notice 2019-17. The IRS provides following justification for this last minute grant of relief in Section 2 of the Notice:
Due to certain changes in the rules that affect farmers and fishermen, the Treasury Department and IRS anticipate that farmers and fishermen may have difficulty accurately determining and paying their tax liability for the 2018 taxable year by March 1, 2019.
The qualifying farmers and fishermen will obtain an extension of time under the conditions noted below:
Under the authority granted by section 6654(e)(3)(A), the addition to tax under section 6654 for failure to make an estimated tax payment for the 2018 tax year is waived for any qualifying farmer or fisherman who files his or her 2018 income tax return and pays in full any tax due by April 15, 2019, or by April 17, 2019, for those taxpayers who live in Maine or Massachusetts.
The notice provides that taxpayers must take the following steps to indicate their return qualifies for this relief:
Farmers and fishermen requesting this 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.