Did South Carolina waive the estimated-tax underpayment penalty for farmers and fishermen for tax year 2018 (per SC IL #19-8)?

Plain-English summary

South Carolina waived the estimated-tax underpayment penalty for qualifying farmers and fishermen for tax year 2018, matching the IRS's relief in Notice 2019-17. Normally, farmers and fishermen who skip quarterly estimated payments avoid the penalty only if they file and pay in full by March 1 of the following year. For 2018, both the IRS and South Carolina let them miss that March 1 deadline without penalty if they file their return and pay in full by April 15, 2019.

The relief was prompted by rule changes (following the federal Tax Cuts and Jobs Act) that made it hard for many farmers and fishermen to compute their liability accurately by March 1. A taxpayer counts as a farmer or fisherman for 2018 if at least two-thirds of total gross income came from farming or fishing in either 2017 or 2018 (IRC § 6654(i)(2)).

Because South Carolina adopts the federal estimated-tax and penalty rules of the Internal Revenue Code (with minor exceptions) under §§ 12-6-3910 and 12-54-55, the Department simply follows the IRS's position here.

What this means for you

If you are a qualifying farmer or fisherman

For tax year 2018, you can avoid the estimated-tax underpayment penalty by filing your South Carolina income tax return and paying the full amount due by April 15, 2019 — you did not have to meet the usual March 1 deadline.

If two-thirds of your income is not from farming or fishing

This relief does not apply to you; the ordinary estimated-tax rules and deadlines govern.

Common questions

Q: What is the extended deadline under this relief?
A: File and pay in full by April 15, 2019 (instead of the normal March 1, 2019).

Q: Who qualifies as a farmer or fisherman for 2018?
A: A taxpayer with at least two-thirds of total gross income from farming or fishing in either 2017 or 2018.

Q: Why does South Carolina follow the IRS on this?
A: South Carolina adopts the federal estimated-tax and penalty provisions of the Internal Revenue Code (with minor exceptions), so the Department follows IRS Notice 2019-17.

Subject

Farmers and Fishermen Penalty Relief for Tax Year 2018

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL19-8.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 125, Columbia, South Carolina 29214-0575

SC INFORMATION LETTER #19-8

SUBJECT:

Farmers and Fishermen Penalty Relief for Tax Year 2018
(Income Tax)

DATE:

March 13, 2019

REFERENCE:

S.C. Code Ann. Section 12-6-3910 (2014)
S.C. Code Ann. Section 12-54-55 (2014)

SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2014)
S.C. Code Ann. Section 1-23-10(4) (2005)
SC Revenue Procedure #09-3

SCOPE:

An Information Letter is a written statement issued to the public to
announce general information useful in complying with the laws
administered by the Department. An Information Letter has no
precedential value.

INTRODUCTION
In IRS Notice 2019-17, the Internal Revenue Service announced that it will waive federal
penalties imposed by Internal Revenue Code Section 6654(a) for underpayments of estimated
taxes by certain farmers and fishermen. The Department will follow the Internal Revenue
Service’s position in this matter and will also provide penalty waivers for qualifying farmers and
fishermen who file and pay their individual income taxes in full by April 15, 2019.
BACKGROUND
Individuals are generally required to have taxes withheld from wages or pay estimated taxes in
four installments under both federal and South Carolina law. IRC Section 6654 and S.C. Code
Section 12-6-3910. For both federal and South Carolina purposes, normally, farmers and
fishermen who choose not to make the estimated installment payments are not subject to a
penalty if they file their return and pay the full amount of tax due by March 1 of the following
year. IRC Section 6654(i) and S.C. Code Sections 12-6-3910 and 12-54-55.

PENALTY RELIEF
Because of certain rule changes causing many farmers and fishermen to have difficulty in
accurately determining their tax liability by the March 1 deadline, the IRS has announced that it
will waive the penalty for qualifying farmers and fishermen who miss the March 1 deadline if
they file their income tax returns and pay their taxes in full by April 15, 2019. A taxpayer
qualifies as a farmer or fisherman for tax year 2018 if at least two-thirds of the taxpayer’s total
gross income was from farming or fishing in either 2017 or 2018. IRC Section 6654(i)(2).
South Carolina adopts federal estimated tax and penalty provisions of the Internal Revenue
Code, with minor exceptions. S.C. Code Sections 12-6-3910 and 12-54-55. The Department will
follow the Internal Revenue Service’s position in this matter and will waive penalties for
qualifying farmers and fishermen who miss the March 1, 2019 deadline if they file their returns
and pay in full by April 15, 2019.

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