Drought-Stricken Farmers and Ranchers Have More Time to Replace Livestock; 38 States Affected

All to often we forget about the farmers who provide food for our tables.  The IRS has extended the time necessary to replace livestock and defer taxes on any gains due because of the forced sales.  For those of you who are interested, this is what's happening with the farmers and ranchers in 38 states. 

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WASHINGTON — Farmers and ranchers who previously were forced to sell livestock due to drought, like the drought currently affecting much of the nation, have an extended period of time in which to replace the livestock and defer tax on any gains from the forced sales, the Internal Revenue Service announced today.

Farmers and ranchers who, due to drought, sell more livestock than they normally would may defer tax on the extra gains from those sales. To qualify, the livestock generally must be replaced within a four-year period. The IRS is authorized to extend this period if the drought continues.

The one-year extension of the replacement period announced today generally applies to capital gains realized by eligible farmers and ranchers on sales of livestock held for draft, dairy or breeding purposes due to drought. Sales of other livestock, such as those raised for slaughter or held for sporting purposes, and poultry are not eligible.

The IRS is providing this relief to any farm located in a county, parish, city, borough, census area or district, listed as suffering exceptional, extreme or severe drought conditions by the National Drought Mitigation Center (NDMC), during any weekly period between Sept. 1, 2012, and Aug. 31, 2013. All or part of 38 states are listed. Any county contiguous to a county listed by the NDMC also qualifies for this relief.

As a result, farmers and ranchers in these areas whose drought sale replacement period was scheduled to expire at the end of this tax year, Dec. 31, 2013, in most cases, will now have until the end of their next tax year. Because the normal drought sale replacement period is four years, this extension immediately impacts drought sales that occurred during 2009. But because of previous drought-related extensions affecting some of these localities, the replacement periods for some drought sales before 2009 are also affected. Additional extensions will be granted if severe drought conditions persist.

Details on this relief, including a list of NDMC-designated counties, are available in Notice 2013-62, posted today on IRS.gov. Details on reporting drought sales and other farm-related tax issues can be found in Publication 225, Farmer’s Tax Guide, also available on the IRS web site.

Delay Filing Your Taxes; But Not Paying Your Taxes; Relief from Late Payment Tax Penalties

Below are two very important notices, one from the IRS themselves and the other from a Tax Professional Organization, with links back to the IRS.  Either way it's good news if you having trouble meeting the April 15th deadline.

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File an extension. If your return is not ready by April 15, you can get an automatic extension for an extra six months. E-file your extension using the Free File program. You can also get an extension using Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. Visit IRS.gov to download and print the form, or call 800-TAX-FORM (800-829-3676) to have the form mailed to you. Allow at least 10 days for mailing. You should e-file or mail your extension, and pay any tax due, by April 15. An extension gives you extra time to work on your return, not more time to pay.

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Washington, D.C. (March 20, 2013)

By Michael Cohn


The Internal Revenue Service is giving relief from late-payment tax penalties to individuals and businesses that request a tax-filing extension because they are attaching to their returns any of the forms that couldn’t be filed until after January.

The relief applies to the late-payment penalty, normally 0.5 percent per month, charged on tax payments made after the regular filing deadline. This relief applies to any of the forms delayed until February or March, primarily due to the January enactment of the American Taxpayer Relief Act.

Taxpayers using forms claiming such tax benefits as depreciation deductions and a variety of business credits qualify for this relief. A complete list of eligible forms can be found in Notice 2013-24, posted today on IRS.gov.

Individuals and businesses qualify for this relief if they properly request an extension to file their 2012 returns. Eligible taxpayers need not make any special notation on their extension request, but as usual, they must properly estimate their expected tax liability and pay the estimated amount by the original due date of the return.

The return must be filed and payment for any additional amount due must be made by the extended due date. Interest still applies to any tax payment made after the original deadline.

Further details on the tax relief, including instructions for responding to penalty notices, is available in Notice 2013-24.

The affected forms include:
• Form 3800, General Business Credit
• Form 4136, Credit for Federal Tax Paid on Fuels
• Form 4562, Depreciation and Amortization (Including Information on Listed
• Property)
• Form 5074, Allocation of Individual Income Tax to Guam or the Commonwealth
• of the Northern Mariana Islands
• Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign
• Corporations
• Form 5695, Residential Energy Credits
• Form 5735, American Samoa Economic Development Credit
• Form 5884, Work Opportunity Credit
• Form 6478, Alcohol and Cellulosic Biofuels Credit
• Form 6765, Credit for Increasing Research Activities
• Form 8396, Mortgage Interest Credit
• Form 8582, Passive Activity Loss Limitations
• Form 8820, Orphan Drug Credit
• Form 8834, Qualified Plug-in Electric and Electric Vehicle Credit
• Form 8839, Qualified Adoption Expenses
• Form 8844, Empowerment Zone and Renewal Community Employment Credit
• Form 8845, Indian Employment Credit
• Form 8859, District of Columbia First-Time Homebuyer Credit
• Form 8863, Education Credits (American Opportunity and Lifetime Learning
• Credits)
• Form 8864, Biodiesel and Renewable Diesel Fuels Credit
• Form 8874, New Markets Credits
• Form 8900, Qualified Railroad Track Maintenance Credit
• Form 8903, Domestic Production Activities Deduction
• Form 8908, Energy Efficient Home Credit
• Form 8909, Energy Efficient Appliance Credit
• Form 8910, Alternative Motor Vehicle Credit
• Form 8911, Alternative Fuel Vehicle Refueling Property Credit
• Form 8912, Credit to Holders of Tax Credit Bonds
• Form 8923, Mine Rescue Team Training Credit
• Form 8932, Credit for Employer Differential Wage Payments


• Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit