IRS Provides Blanket Underpayment Penalty Relief for Qualifying Farmers Filing 2025 Returns

On April 1, 2026, the IRS issued Notice 2026-24 announcing that it was waiving the estimated tax penalty for any qualifying farmer or fisherman who files a calendar year 2025 return and pays in full any tax due by April 15, 2026. This waiver applies automatically to all qualifying farmers or fishermen filing a calendar year 2025 return.

Farmers who otherwise satisfy the criteria for relief, but already filed a return and paid a penalty under §6654, may request an abatement of the penalty by filing Form 843, Claim for Refund and Request for Abatement. The farmers should follow the instructions for Form 843 and take the following steps:

• Write “Request for Relief under Notice 2026-24” at the top of Form 843.
• Check the top-of-form box for ‘Penalty—Abatement or refund of a penalty or addition to tax due to reasonable cause or other reason allowed under the law’.
• On line 3, show the dates of any payment of tax liability and addition to tax under §6654 for the tax period involved.
• On line 4, check the box for ‘Income’.
• Enter “6654” on line 6.
• Check box c on line 7.
• On line 8, state why the taxpayer’s circumstances satisfy the criteria for relief under this notice. Generally, this would include the status of the taxpayer as a qualifying farmer or fisherman, filing a calendar-year 2025 tax return, and paying in full any tax due on the return by April 15, 2026.

Farmers eligible for relief under the Notice are not required to attach Form 2210-F, Underpayment of Estimated Tax by Farmers and Fishermen, solely to claim the waiver provided by the Notice.

Definition of Qualifying Farmers or Fishermen

The above relief applies to all qualifying farmers or fishermen filing a calendar year 2025 return. Calendar year taxpayers are qualifying farmers or fishermen under IRC §6654(i) if:

• Their “gross income from farming” is at least 66 ⅔% of their “total gross income” from all sources for the taxable year OR
• Their gross income from farming shown on the return for the preceding taxable year was at least 66 ⅔% of their total gross income from all sources

Qualifying farmers or fishermen are generally exempt from a penalty for failing to pay estimated taxes if they meet one of the following requirements:

• They file their return and pay all tax due by March 1 (in 2026, the deadline was on March 2 because March 1 was a Sunday), OR
• Their income tax withholding will be at least 66 ⅔% of the total tax shown on their current year tax return or 100% of the total tax shown on their prior year return OR
• They make a single estimated tax payment by January 15 following the tax year.

Those who choose to make a single estimated tax payment by January 15 of the following tax year may file their return and pay the remainder of the tax due by the standard tax filing deadline, which is generally April 15. Qualifying farmers making one estimated tax payment by January 15 must pay the smaller of:

• 66 ⅔% of tax from current year, or
• 100% of the tax shown on the prior year’s return

The relief issued by the IRS on April 1 means any qualifying farmer or fisherman is exempt from an underpayment penalty for the 2025 tax year, even if they did not pay estimates by January 15 or file and pay their taxes by March 1.

Why the Relief?

The One Big Beautiful Bill Act added several below-the-line deductions for individuals: a new deduction for tips, overtime, and seniors. These changes impacted the calculation of the qualified business income (QBI) deduction taxable income limit. IRS corrected the 2025 Instructions for Form 8995 on January 27, 2026, including the line 11 computation of taxable income before the qualified business income deduction. Some taxpayers and preparers reported that they could not complete returns until February 23, 2026, when updated software became available. Given these circumstances, the IRS exercised its authority under IRC §6654(i)(1)(D) and §7503 to provide the above penalty relief. 

Original article published April 2, 2026. Reprinted here with permission.