Did South Carolina waive the estimated-tax underpayment penalty for farmers and fishermen for tax year 2012 (per SC IL #13-2)?

Plain-English summary

South Carolina waived the estimated-tax underpayment penalty for qualifying farmers and fishermen for tax year 2012, as long as they filed their return and paid the full tax due by April 15, 2013. The Department did this to follow the IRS's position in Notice 2013-5.

The normal rule. Individuals generally must have tax withheld or pay estimated tax in four installments under both federal and South Carolina law (IRC § 6654; S.C. Code § 12-6-3910). Farmers and fishermen who choose not to make estimated installments normally avoid a penalty if they file and pay in full by March 1 of the following year (IRC § 6654(i); S.C. Code §§ 12-6-3910 and 12-54-55).

Why relief was granted. Because of tax-law changes from the American Taxpayer Relief Act, the IRS delayed processing 2012 returns and did not begin accepting individual returns until January 30, 2013. The IRS therefore said it would waive the penalty for qualifying farmers and fishermen who miss the March 1 deadline if they file and pay in full by April 15, 2013. Because South Carolina adopts the federal estimated-tax and penalty provisions (with minor exceptions), the Department followed suit.

Who qualifies. A taxpayer is a farmer or fisherman for tax year 2012 if at least two-thirds of total gross income was from farming or fishing in either 2011 or 2012 (IRC § 6654(i)(2)).

What this means for you

If you are a farmer or fisherman for 2012

If you did not make estimated payments and missed the March 1, 2013 deadline, you avoided the South Carolina underpayment penalty by filing your return and paying the full tax due by April 15, 2013, provided you met the two-thirds gross-income test.

Common questions

Q: What relief did this letter provide?
A: A waiver of the estimated-tax underpayment penalty for qualifying 2012 farmers and fishermen who filed and paid in full by April 15, 2013.

Q: Who counts as a farmer or fisherman?
A: Someone with at least two-thirds of total gross income from farming or fishing in either 2011 or 2012.

Q: Why did South Carolina grant it?
A: To follow the IRS (Notice 2013-5), which extended relief after return-processing delays tied to the American Taxpayer Relief Act; South Carolina adopts the federal estimated-tax and penalty rules.

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL13-2.pdf

Original ruling text

State of South Carolina

Department of Revenue
300A Outlet Pointe Blvd., P.O. Box 12265, Columbia, South Carolina 29211
Website Address: http://www.sctax.org

SC INFORMATION LETTER #13-2

SUBJECT:

Farmers and Fishermen Penalty Relief for Tax Year 2012
(Income Tax)

REFERENCE:

S.C. Code Ann. Section 12-6-3910 (Supp. 2012)
S.C. Code Ann. Section 12-54-55 (Supp. 2012)

SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (2000)
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 Notice 2013-5, the Internal Revenue Service (IRS) announced that it will waive federal
penalties imposed by Internal Revenue Code (IRC) Section 6654(a) for underpayments of
estimated taxes by certain farmers and fishermen. The South Carolina Department of Revenue
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, 2013.
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 6654(i) and S.C. Code Sections 12-6-3910 and 12-54-55.
Penalty Relief
Because of tax law changes resulting from the American Taxpayer Relief Act, Pub. L. No. 112240, the IRS has announced that it delayed the processing of 2012 federal income tax returns and
did not begin processing individual income tax returns until January 30, 2013. As a result, the
IRS has stated it will waive the penalty for qualifying farmers and fishermen who miss the

March 1 deadline if they file and pay their taxes in full by April 15, 2013. A taxpayer qualifies as
a farmer or fisherman for tax year 2012 if at least two-thirds of the taxpayer’s total gross income
was from farming or fishing in either 2011 or 2012. 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, 2013, deadline if they file their return
and pay in full any tax due by April 15, 2013.
If you have any questions concerning this matter, please call the Department at (803) 898-5000.

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