The IRS just announced penalty relief for any farmers who had to file their return after March 1 due to delays associated with the MF Global bankruptcy case. This new release indicates the magnitude and far-reaching implications associated with untangling MF Global's financial records which have delayed the issuance of 1099 forms to many of its customers.
For months, thousands of farm customers of bankrupt MF Global have been wondering how to complete their 2011 income tax returns. Most had not received proper 1099s in time for filing their calendar 2011 taxes. Additionally, many needed to assess not only whether their positions were a hedge, speculative gain or loss for tax purposes, but whether missing cash left on deposit with MF Global qualified as a deduction.
To qualify for the relief, one must first qualify as a farmer. An individual is a farmer for these purposes if two-thirds of the individual's total gross income for the taxable year or the preceding taxable year is from farming. This relief being provided also applies to fishermen affected by the MF Global bankruptcy. Generally, farmers can avoid paying estimated taxes if they file their returns and pay the full amount of tax shown on their return by March 1, 2012.
If a taxpayer has an underpayment of estimated tax, all or part of the penalty for the underpayment may be waived if the IRS determines that the underpayment was due to a casualty, disaster or other unusual circumstance and it would be inequitable to impose the penalty.
To request a waiver of the estimated tax penalty, taxpayers will need to complete Form 2210-F Underpayment of Estimated Tax by Farmers and Fishermen.