CHICAGO (Reuters) - Tax officials will not penalize farmers who could not properly file their taxes because they had accounts at bankrupt broker MF Global.
The Internal Revenue Service said in a press release on Friday it would waive fines for farmers who underpaid their taxes because they did not receive forms reflecting profits and losses in MF Global accounts before a March 1 deadline.
The tax forms, known as 1099s, are normally delivered around the beginning of February.
However, the trustee overseeing the bankruptcy of MF Global, which had a large number of agricultural clients, pushed back the deadline for mailing the forms as he investigated an estimated $1.6 billion shortfall in customers’ accounts. That forced many former clients to piece together their earnings based on personal records and submit their best estimates to the IRS.
The firm, run by former New Jersey Gov. Jon Corzine, collapsed October 31 after making bad bets on European sovereign debt.
Farmers must file their taxes by March 1 if they earned at least two-thirds of their gross income from farming and did not file an estimate of what they owe in mid January. The earlier-than-normal deadline is a trade-off for not paying estimated taxes throughout the year.
“Because so many farmers take advantage of that special rule, it became an issue” when they did not receive the tax forms before March 1, said IRS spokesman Eric Smith, who did not have an estimate of how many farmers were impacted. He said it was not uncommon for the agency to waive penalties in extreme circumstances, including natural disasters.
Farmers who struggled to piece together how much money they earned said the IRS should have acted sooner to give them guidance or relief.
“It’s probably a little late,” said Kent Meister, a tax agent for FBFM Association in Illinois who helped farmers with MF Global accounts prepare their returns. He added the relief was “better than nothing at all.”
Reporting By Tom Polansek; Editing by Alden Bentley