For those of you impacted by the recent winter storms and power grid failures in Texas, we hope that you are recovering quickly and that your health and safety have been maintained.
The IRS has granted an extension of time to file various individual and business tax returns, and make tax payments, for those impacted by this winter storm. This means that tax returns originally due March 15, 2021 (S corporation and partnership returns for calendar year tax payers), are now due June 15th, 2021. This also means that the normal Tax Day of April 15th for filing individual tax returns (1040s) is also moved to June 15th, 2021.
In addition to these deadlines moving, per the IRS news release, the June 15 deadline also applies to quarterly estimated income tax payments due on April 15 and the quarterly payroll and excise tax returns normally due on April 30. It also applies to tax-exempt organizations, operating on a calendar-year basis, that have a 2020 return due on May 17.
In addition, penalties on payroll and excise tax deposits due on or after February 11 and before February 26 will be abated as long as the deposits are made by February 26.
The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.
The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.
In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.
The entirety of the news release can be found here.
Impact on Farmers and Fisherman
Unfortunately, the IRS and Congress have overlooked a key filing date for Farmers and Fisherman, the March 1st deadline to avoid underpayment penalties.
The normal rule is that farmers are due April 15 like everyone else. However, if they do not pay in estimates, then they must file and pay by March 1 to avoid underpayment penalties. The penalty is figured as follows:
- If 2/3 of the tax due is paid with the 4th quarter estimate (January 15), then there is no penalty and the return is due April 15(almost never happens).
- If no estimated payments are made, or there is tax due in excess of FIT withholding, etc, then the farmer can both file their return and pay tax by March 1 with no underpayment penalty.
- If the return is not filed and paid by March 1, then the penalty is figured on the underpayment from January 15 until filing (generally Jan 15 – Apr 15 on 2/3 of the tax). So it is basically interest from January 15 until April 15, or now June 15.
With this in mind, also remember that the IRS may come out with a clarification regarding the March 1st deadline.
Please reach out to any of our staff with questions or assistance.