U.S. Senator Chuck Grassley, R-IA, yesterday - February 28 - convinced the U.S. Treasury Secretary to give a break to Iowa farmers who were unable to file their federal income taxes by the March 1 deadline because of winter storm damage and power outages. "Thanks to this IRS ruling yesterday, you can file later than March 1 and request a waiver from IRS to avoid the penalty," says Grassley.
Also on Wednesday February 28, Iowa Governor Chet Culver directed the Iowa Department of Revenue to extend the deadline for filing state income tax for farmers affected by the recent power outages. Farmers normally must file and pay their 2006 Iowa individual income taxes by March 1 to avoid penalties for failing to make estimated payments. Culver's order directs that no Iowa penalty for failure to make estimated payments will be due for the 2006 tax year if returns are filed by March 15.
Updates to Iowa tax relief for farmers will be posted on the department's Web site at www.state.ia.us/tax
Federal tax deadline also extended
Grassley made the case to Secretary Hank Paulson during a breakfast meeting. Later in the day on February 28, the Internal Revenue Service issued special instructions that all farmers hit by the storm who were unable to file their taxes by the deadline can request a winter ice storm waiver from the IRS for the penalty that they would otherwise incur.
At the morning meeting Grassley explained the predicament that a number of Iowa farmers are in because of the unusually severe winter storm this past week. Paulson was not aware of the problem and indicated he would look into it and do what he could to help. Ice and snow this past weekend knocked out power to over 200,000 Iowans. As of Feb 28 there are still 50,000 Iowans without electricity, many in rural areas.
"The Secretary stood by his word that he would do what he could to help. Thanks to his quick action, farmers can worry about what's most important – taking care of their livestock and family," says Grassley.
How to request waiver of tax penalty
A special rule allows many farmers to routinely delay their estimated tax payments without penalty so long as they file their return with their tax payment by March 1 of each year. The power outages led many Iowa accountants to call Grassley's office to explain that farmers this year would be unable to complete their returns by March 1 because their computers were down and they could not print their files. The cancellations will also lead to a backlog when the power does eventually come on.
To request a waiver of the estimated tax penalty in accordance with today's decision, farmers should complete Form 2210-F Underpayment of Estimated Tax by Farmers and Fishermen. People should also attach a statement explaining the reasons they are unable to meet the estimated tax requirements. At the top of the request write "Request for Waiver Due to Winter Ice Storms."
Grassley has also written President George W. Bush to express his appreciation for the action made by the IRS. Grassley also outlined the circumstances in Iowa due to the storms. The letter urges the President to respond quickly if the Governor of Iowa makes a request for broad-based federal disaster assistance. This would make available a range of emergency relief services in Iowa and give the IRS the authority to give tax filing flexibility to all farmers in a disaster county.