IRS Letter 6700: Farmland Sale Tax Transfer Agreement Received

What This Letter Means

Letter 6700 confirms the IRS received a transfer agreement under Internal Revenue Code section 1062. It goes to both the transferor and the transferee, and to any representative or tax information designee on file.

Background

Section 1062 was added by Public Law 119-21 in 2025. It lets certain taxpayers who sell qualified farmland property to a qualified farmer elect to pay the tax on the gain in four equal annual installments. It applies to sales in tax years beginning after July 4, 2025. Each installment is due on the unextended due date of the return.

For a C corporation, trust, or estate, a sale of substantially all its assets, a liquidation, or a similar event normally makes all remaining installments due at once. There's an exception. The buyer can sign a transfer agreement, Form 1062-T, agreeing to be liable for the remaining installments as if it were the original taxpayer. Both sides sign it. Letter 6700 acknowledges that agreement.

What Happens Next

• The IRS reviews the agreement and links the two accounts.
• It assesses the deferred tax to the transferee. The assessment equals the amount in the agreement, or the transferor's remaining balance if that balance has dropped below the agreed amount.
• The transferee then receives Letter 6699 about the transferred installments.

What to Do

• Keep this letter with the sale documents and the signed Form 1062-T.
• Transferee: calendar every remaining installment due date. A late installment can make all remaining installments due at once. Before that happens, the IRS sends Letter 6701, which gives 30 days to pay the installment plus interest and show reasonable cause.
• Both sides: confirm the names, identification numbers, and amount in the letter match the agreement you signed. If something is wrong, call the number on the letter.

Deadlines

Letter 6700 itself requires no response. The installment due dates are the deadlines that matter.

If you're involved in a farmland sale with deferred tax under section 1062, call us at (813) 229-7100.