Farmers still face many unknowns in regard to the new tax law, says Paul Neiffer, tax principal with CliftonLarsonAllen. He’s encouraging farmers to file an extension.
“I’m recommending more farmers this year file extensions than I ever have,” he told AgriTalk host Chip Flory this week.
Section 199A is particularly to blame in the need for more time. As of this week, the IRS has still not provided adequate guidance on the details of this tax provision, which provides a deduction for farmers who do business with a cooperative.
“It just went to review about a week ago,” Neiffer says. “Now we think we’ve done it correct, but nobody knows. I mean, it’s the worst filing season ever for farmers.”
Why File An Extension
Until there is guidance from the IRS, nobody can be sure if accountants have interpreted the new tax code correctly and filing amended returns can be costly.
“If you think that you’ve got the 199A advantage should you file for an extension and wait,” he said. “My concern for a lot of our farmers that have already filed their return is that we’re going to find out that if they had a material deduction and the IRS says it’s got to be done differently. We’re going to have to go back and file an amended return. And the problem with filing an amended return is a lot of the time you’re going to spend almost as much money to file an amended return as we did to prepare your tax return.”
Farmers Impacted By Flood Automatically Get An Extension
If you’re in a nationally declared disaster area, the IRS will grant you an automatic extension to file and pay your taxes, according to Neiffer.
“So, a farmer that normally would be filing on April 15, they actually now have all the way until July 31, to file their tax return,” he says.
While that extension won’t give you an out on payroll taxes, the IRS has historically granted waivers for those he said.
“You’re going to have to write a letter to the IRS, but they’ll grant a waiver on that,” he adds.
For more information, visit Neiffer’s blog.
