The IRS provides estimated tax penalty relief for farmland sales under section 1062.

Notice 2026-3, published on Dec. 22, 2025, provides relief from additions to tax for underpayment of estimated income tax by taxpayers making an election under section 1062. The IRS will waive a portion of the penalty imposed under section 6655 for failure to make estimated tax payments attributable to a qualified sale or exchange of qualified farmland to qualified farmers for which an election under section 1062(a) is properly made. Taxpayers that elect under section 1062 to defer payment of tax may calculate required estimated tax payments using the guidance in Notice 2026-3. See Notice 2026-3 for additional information.