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AICPA Tax Advocacy Update: Farmers & Fishers

The following information was provided by the AICPA’s Tax Advocacy Team on February 26, 2021.

“We’ve heard from members (and several state societies have, too) who have filing questions regarding farmers and fishermen who are subject to special federal estimated tax rules and due dates.

Here’s information from our Tax Advocacy Team that you can use to answer questions:

Traditionally, qualifying farmers and fishermen have two options:

  • Make one specially calculated estimated tax payment for tax year 2020 by January 15, 2021, and file the return and pay the balance by April 15, 2021; or
  • Make no estimated payment, and file the return and pay the entire tax by March 1

CPAs have noted that certain forms required for filing, most notably the Qualified Business Income (QBI) Form 8995, are not available. Others have raised the issue that Schedules K-1 have not been received. AICPA has raised the forms issue with the IRS, but it has yet to make any change to the March 1 deadline.

If IRS makes no change to the March 1 date, a best practice would be to file the tax returns as soon as possible – no extension of time is available – pay the tax and include an amount for the underpayment of estimated tax penalty calculated from January 15 to the date of filing.

Last Tuesday, February 23, AICPA sent a letter to the IRS calling for IRS to provide certainty around the 2021 filing season due dates, and to make any announcements sooner, rather than waiting until tax due dates are imminent. It also calls for underpayment and late payment penalty relief, delaying IRS collections and expanded temporary e-signature relief.

Last year, when IRS changed the due dates around April 15 to July 15, it also reduced the underpayment of estimated tax penalty related to farmers and fishermen. IRS hasn’t indicated any specific plans to do this again in 2021, and the AICPA continues to press on the issue of penalty relief.

On a related note: A small group of Democrats on the House Ways and Means Committee sent a letter to the IRS concerning the slow start to the 2021 filing season. Their letter does not call on the IRS to extend the date, but it certainly hints at what many think is the inevitable: an extension of some length to the April 15 deadline.

Finally, here’s a link to the Journal of Accountancy story regarding the AICPA filing season letter.”

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