The Internal Revenue Service recently issued Notice 2026-24, which provides critical administrative relief for qualifying farmers and fishermen who may be subject to the addition to tax for underpayment of estimated income taxes under Internal Revenue Code (IRC) § 6654. Due to late corrections to the 2025 Instructions for Form 8995 and subsequent delays in tax preparation software updates, the Service has exercised its authority to waive these penalties for affected taxpayers who file and pay their 2025 tax liabilities by April 15, 2026. This article examines the statutory framework, the factual basis for the IRS's waiver, and the specific procedural steps tax professionals must take to secure this relief for their clients.

Statutory Background and Estimated Tax Requirements

Under the general rule of IRC § 6654, individual taxpayers are required to pay their estimated income tax in "four installments, each of which is 25 percent of the required annual payment". Failure to make sufficient and timely payments generally subjects the taxpayer to an addition to tax under § 6654(a).

However, IRC § 6654(i) carves out a statutory exception for a "qualifying farmer or fisherman," defined as an individual where "at least two-thirds of the taxpayer’s total gross income was from farming or fishing in either the taxable year or the preceding taxable year". For these taxpayers, the Code stipulates that they have "only one required installment payment (instead of four quarterly payments) due on January 15 of the year following the taxable year".

Furthermore, IRC § 6654(i)(1)(D) provides a safe harbor: if the qualifying farmer or fisherman fails to make the January 15 estimated tax payment, they are "not subject to an addition to tax for failing to pay estimated income tax if the taxpayer files the return for the taxable year and pays the full amount of tax reported on the return by March 1 of the year following the taxable year".

The Impetus for Administrative Relief

The necessity for Notice 2026-24 stems from complications surrounding the reporting of the Qualified Business Income Deduction. The Department of the Treasury and the IRS acknowledged that for the calendar-year 2025 taxable year, "some qualifying farmers and fishermen may have had difficulty preparing and electronically filing complete federal income tax returns that include Form 8995, Qualified Business Income Deduction Simplified Computation".

The core issue arose because "The IRS corrected the 2025 Instructions for Form 8995 on January 27, 2026, including the line 11 computation of taxable income before the qualified business income deduction". Consequently, tax professionals and taxpayers reported that "they could not complete returns until February 23, 2026, when updated software became available".

Because the statutory deadline to avoid the underpayment penalty under §§ 6654(i)(1)(D) and 7503 for the 2025 tax year was March 2, 2026 (the first business day following March 1), the late software rollout severely compressed the filing window.

Nature of the Relief Provided

Congress anticipated that strict application of estimated tax penalties could occasionally lead to unjust results. Under IRC § 6654(e)(3)(A), the Secretary of the Treasury is authorized to "waive the section 6654 addition to tax for an underpayment of estimated tax in unusual circumstances to the extent its imposition would be against equity and good conscience".

Relying on this statutory authority, the Treasury and the IRS determined that the software delays constituted "unusual circumstances". Accordingly, the IRS has ruled that the addition to tax under § 6654 for the 2025 taxable year is fully "waived for any qualifying farmer or fisherman who files a calendar-year 2025 tax return and pays in full any tax due on the return by April 15, 2026".

Securing the Relief for Taxpayers

Tax professionals have two avenues for securing this relief for their clients, depending on the current filing status of the 2025 return:

Automatic Application

For qualifying clients whose 2025 returns have not yet been filed, or were filed without calculating the penalty, the waiver is applied automatically. The Notice explicitly states that "The waiver will apply automatically to any taxpayer who qualifies for the waiver and does not report an addition to tax under section 6654 on the calendar-year 2025 tax return". Additionally, practitioners should note that "A taxpayer eligible for relief under this notice is not required to attach Form 2210-F, Underpayment of Estimated Tax by Farmers and Fishermen, solely to claim the waiver".

Retroactive Abatement

If a practitioner has already filed a 2025 return for a qualifying client and "reported an addition to tax under section 6654, [they] may request an abatement of the addition to tax by filing Form 843, Claim for Refund and Request for Abatement". When preparing Form 843 for this specific relief, practitioners must adhere to the following procedural formatting directed by the Service:

Write "Request for Relief under Notice 2026-24" at the top of Form 843.
Check the top-of-form box for "Penalty—Abatement or refund of a penalty or addition to tax due to reasonable cause or other reason allowed under the law".
On line 3, show the dates of any payment of tax liability and the § 6654 addition to tax for the period.
On line 4, check the box for "Income".
Enter "6654" on line 6.
Check box c on line 7.
On line 8, provide the factual narrative. The IRS indicates that "Generally, this would include the status of the taxpayer as a qualifying farmer or fisherman, filing a calendar-year 2025 tax return, and paying in full any tax due on the return by April 15, 2026".

By extending the effective § 6654(i) safe harbor deadline to April 15, 2026, Notice 2026-24 provides vital breathing room for tax professionals to ensure their agricultural and fishing clients can accurately compute their QBI deductions without facing unwarranted underpayment penalties.

Prepared with assistance from NotebookLM.