Washington, D.C. (March 4, 2026) – In a letter submitted to the Internal Revenue Service (IRS), the American Institute of CPAs (AICPA) requested penalty relief for qualified farmers due to changes made to the instructions for Form 8995, Qualified Business Income Deduction Simplified Computation. The changes create a shortened filing window and may cause a disadvantage to some qualified farmers outside of their control.
On January 27, 2026, the IRS updated instructions for Form 8995, requiring taxpayers to reduce the amount reported on line 11 (“taxable income before qualified business income deduction”) as a result of new deductions on Form 1040, line 13b, put into place by the One Big Beautiful Bill Act, or H.R. 1.
Because of this change, Form 8995 had to be revised and reissued. In some cases, the updated form wasn’t made available until February 23, creating difficulties for farmers and fishers. These taxpayers avoid the January 15 estimated tax payment if they file their federal return by March 1 (March 2 in 2026). Filing by that date allows them to skip the estimated payment and pay all tax due with their return without facing underpayment penalties. The delayed availability of Form 8995 jeopardizes their ability to meet the March 2 deadline.
To address this hardship, the AICPA’s letter recommends that Treasury and IRS:
Issue penalty relief, under section 6654(e)(3)(A), for underpayment of 2025 estimated taxes to qualified farmers who file their federal income tax return, including Form 8995 and pay the tax due by April 15, 2026.
Allowing only one week to finalize their returns imposes an unreasonable burden on qualified farmers and their tax preparers. Because the January 15 deadline to make estimated taxes has passed, qualified farmers have already made their decision either to submit an estimated tax payment on January 15 or file their return and pay any tax due by March 2. Those who chose the option to file their return by March 2 are left at a disadvantage and without administrative intervention will be subject to unfair penalties.
“This disruption has imposed added hardship on qualified farmers, a group that broadly relies on the Qualified Business Income deduction, and their preparers, making it difficult to complete and file accurate returns by Monday's deadline,” says Scott Klein, Senior Manager, AICPA Tax Policy & Advocacy. “Fair and equitable administration of tax guidance is essential for farmers, who are a cornerstone of the national economy and rural communities, and who depend on clear, timely IRS instructions to meet statutory deadlines.”
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with 397,000 members and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education, and consulting. A founding member of the Association of International Certified Professional Accountants, the AICPA sets ethical standards for the profession, attestation standards, and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state, and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, partners across the profession to build future talent, and drives continuing education to advance the vitality, relevance, and quality of the profession.
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Contact: Veronica L. Vera
202-434-9215
Veronica.Vera@aicpa-cima.com