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IRS Disaster Relief for Drought-Stricken Farmers

When people throw the word “disaster” around, they’re usually talking about earthquakes, hurricanes, or even tsunamis. It’s sometimes difficult to comprehend the scope of damage or the amount of time it takes to recover from a catastrophe; disasters often are slow, drawn out, and miserable. Anyone who has been the victim of a flood can attest to this fact.

drought stricken farmers

Farmers that endured through this year’s record-breaking drought have experienced one of the worst disasters they could have imagined. Most people are aware of what California went through with the drought, but it certainly was not the only state to suffer this year. In fact, Utah had the worst drought it has seen since 1989. Utah farmers and ranchers have lost a great deal in the last year; many were forced to sell livestock they could no longer feed and water. On paper, this has the appearance of a nice profit and would generally be subject to a taxable gain. However, the IRS is going to provide some disaster relief for many drought stricken farmers throughout 30 states in the form of deferred payments and an extended period to replace livestock.

Utah farmers and ranchers have four years to replace livestock they were forced to sell due to the drought in order to defer tax on the extra gains. However, only livestock with draft, dairy, or breeding purposes qualify. Livestock intended for slaughter or sporting events, as well as poultry, will still be subject to capital gains.

Upon meeting these qualifications, the farmer must have been in an area listed as suffering exceptional, extreme or severe drought conditions according to the National Drought Mitigation Center. This is applicable during the September 1, 2013 through August 31, 2014 drought time period. Any farmers and ranchers that qualify should contact the IRS right away. They may also find helpful information in Publication 225 Farmer’s Tax Guide.

Despite being a collection agency, the IRS does recognize that hard times fall on taxpayers. In fact, according to the IRS list of disaster relief situations, they are still assisting taxpayers with tax relief for disasters going back to 2011. They may even help people experiencing tax issues as a result of disasters older than that. It can be difficult to recognize if you qualify for IRS disaster tax relief, so many who have tax problems caused by a casualty, disaster, or theft may find it helpful to talk with a reputable tax professional about their qualifications.