IRS Notice 2026-54 lists St. Croix, St. John and St. Thomas among the regions that experienced severe, extreme or exceptional drought during the 12 months ending August 31, 2026.
Eligible producers whose four-year replacement period for drought-sold livestock would otherwise end in 2026 receive an extension until the end of the first taxable year after the applicable region completes a drought-free year. A drought-free year is measured as a 12-month period ending August 31 with no week of severe, extreme or exceptional drought in the region.
The provision applies to qualifying animals held for draft, breeding or dairy purposes and sold beyond normal business practice because of drought. Poultry and animals held for slaughter or sporting purposes are excluded, and the notice does not provide cash to buy replacement animals.
The tax result depends on each producer's sale, records and replacement purchases. Farmers with a deadline that may expire this year should review Notice 2026-54 and obtain advice appropriate to their territorial tax filing before relying on the extension.
The V.I. Bureau of Internal Revenue and Department of Agriculture should publish a joint local guide with examples, recordkeeping requirements and contacts for farmers using the federal extension.
Source published Notice issued September 15, 2026; published in Internal Revenue Bulletin 2026-42 on October 13, 2026; times not displayed. Read the original reporting or release for the complete record.
Open original source