Dear Ms. Stiff:
I am writing to you regarding an issue that is a concern for an increasing number of my constituents.Many Sole Proprietor Farmers are required to file tax returns by March 1 each year if they oweincome tax. Many of these same filers will attach a Form 4136, Credit for Federal Tax Paid onFuels, to their return. From talking to several constituents, the Office of the Taxpayer Advocate, andthe Government Accountability Office, the IRS will not be able to process this form electronicallyuntil March 3, which is essentially the day these returns are due since March 1 falls on a Saturday.If filers and preparers are not able to file electronically in this one-day window, they risk incurringa penalty. I am concerned that the IRS has not issued sufficient guidance for tax filers and preparersto cope with this problem. One Iowa preparer described the three choices he was given when hisoffice contacted the IRS by telephone for assistance with this issue:
1. Do not electronically file the tax return; instead file a paper return by March 1 that the IRSwould not process until March 4.2. File an extension for the March 1 deadline.3. File the return electronically without the Form 4136, and amend the return later.
I am not satisfied with the first option because I do not think the IRS should be encouraging paperfiling with all of the benefits that are gained through IRS e-file, such as more accurate processing,proof of receipt, and reduced chance of making mistakes. For most preparers, it is simply notpossible for them to file all of their farming clients’ returns in a single day. If the preparers areunable to electronically submit the return on March 3, 2008, they would need to secure an originalsignature and file by paper, losing out on benefits through no fault of their own.
I do not believe that the second option is technically feasible because while Internal Revenue Code(IRC) section 6654 does specify that there is a waiver of penalties in certain cases, those cases relateto casualty, disaster, or other unusual circumstances to the extent the Secretary of the Treasurydetermines the penalties would be against equity and good conscience. Unless the IRS determinesthat these circumstances apply to this specific situation and provides written guidance, I believe itis against good conscience to hold this option out to filers.
Finally, the third option is reprehensible because it basically tells farmers to pay tax they do not owein order to avoid estimated tax penalties and then, later on, to take the trouble of filing an amendedreturn to have money refunded that should never have been paid in the first place.
I am sure the IRS shares my goal of making it as easy as possible for filers who want to pay whatthey owe to file their completed tax returns on time and without penalty. Given that March 3 is lessthan two weeks away, please tell me how you will quickly advise tax filers to deal with this problemand why the IRS did not give form 4136 higher priority in its computer programming. I am awarethat the AMT legislation put the IRS behind in its programming, but it is very troubling that a formthat is so prevalently used in the farming community would not be electronically available until thefiling deadline date. In an effort to save the IRS the cost of processing these returns by paperbecause of fear that they will not be accepted electronically and in order to provide all taxpayerswith the benefits of electronic filing, I encourage the IRS to find this situation to be fitting of anunusual circumstance as described in IRC section 6654(e)(3) and to issue a news release providingtaxpayers until March 15, 2008, to electronically file without penalty.
All citizens who want to pay what they owe on time should be given a reasonable chance to do sowithout incurring penalties in terms of fines or additional time spent jumping over bureaucratichurdles.
Thank you for your attention to this matter.
Sincerely,
Charles E. GrassleyRanking Member
Cc: Ms. Nina E. OlsonNational Taxpayer AdvocateTaxpayer Advocate Service
