AICPA Recommends Change to Return Due Dates

 

Update (July 30)
Highway funding bill changes tax return due dates
The federal highway funding extension bill passed by Congress on Thursday contains several tax provisions, including changing the due dates for partnership and corporate tax returns, a provision the AICPA has long advocated. Other changes affect mortgage interest statements, basis of inherited assets, and the six-year statute of limitation. Read more.

AICPA President and CEO Barry Melancon, CPA, CGMA, praised Rep. Jenkins who sponsored the original due dates bill and stated, "The changes will reduce the need for extended and amended corporate and individual tax returns and will correct the mismatch of information flow that exists in the system today."

See AICPA’s summary chart on the new due date rules that will go into effect for the 2017 Tax Filing Season (Tax Year 2016).

See AICPA's Summary of States' Legislative Activity on Corporate Due Dates Changes.

See AICPA's Summary of States' Legislative Activity on Partnership Due Dates Changes.

See AICPA Insights blog on state tax due dates conformity to federal due dates.


Background on Due Dates Challenges

 

Taxpayers and preparers have long struggled with problems created by the inefficient timeline and flow of information associated with certain due dates.
Extended return due dates were changed beginning with the 2009 filing year pursuant to regulations  requiring all partnerships and trusts with extended calendar-year returns to file by Sept. 15, along with corporations.

This helped Form 1040 filers who take advantage of the extended due date; however, original/initial return due dates for partnership returns are still problematic because they are due the same date (April 15) as trust and personal returns and one month later than corporate returns.  Individuals, trusts and corporations may all be owners of interests in partnerships.

Having all business and trust returns due September 15 also places an undue burden on practitioners and taxpayers.  Schedules K-1 arrive late, sometimes within days (before or after) of the due date of their personal returns and up to a month after the due date of their business returns. Late K-1s make it difficult, if not impossible, to file a timely, accurate return.


The Solution

The proposed legislation would alleviate the problems by establishing a logical set of due dates focused on promoting a chronologically correct flow of information between pass-through entities and their owners.

It would promote the early filing of more business and personal returns and relieve some of the workload compression surrounding the September 15 business return deadline.

The proposed original tax return due dates would change, as follows:

  • Form 1065 would be due on March 15
  • Form 1120S would be due on March 31
  • Forms 1040, 1041 and 1120 would be due on April 15
  • Foreign Trusts with a U.S. Owner Form 3520-A and FBAR Form TD F 90-22.1 would be due April 15

The AICPA supports the due date proposal because it would:

  • Improve the accuracy of tax and information returns by allowing corporations and individuals to file using current data from flow-through returns that have already been filed rather than relying on estimates.
  • Better facilitate the flow of information between taxpayers (i.e., corporations, partnerships, and individuals).
  • Reduce the need for extended and amended corporate and individual tax returns.
  • Significantly simplify tax administration for the government, taxpayers, and practitioners.

In March 2014, the President released the Administration's 2015 Fiscal Year Revenue Proposals, and in March 2015, the President released the Administration's 2016 Fiscal Year Revenue Proposals, both of which included in the category of proposals to reduce the tax gap and make reforms, a proposal to rationalize tax return filing due dates so they are staggered. They contain many of the same due date changes that the AICPA supports.
AICPA Position

 

 

AICPA supports H.R. 901 and S. 420 and is working to get the legislation enacted.

An AICPA Tax Division task force was formed to explore a legislative solution to the problem of the late receipt of Schedules K-1.

The task force reviewed the results of May 2008/May 2009 member surveys on this topic and various options for legislative change to include: 1) the possibility of 7-month statutory extensions; and 2) the use of staggered due dates for all taxpayers involved in the Schedule K-1 process.  In 2009, the task force and other Tax Division members held discussions with Hill staff, IRS, the National Taxpayer Advocate’s Office, Treasury and others concerning the dilemma of the late receipt of Schedules K-1 by taxpayers and CPAs who prepare the Form 1040, 1041, 1065, 1120 and 1120S tax returns which include such K-1 information.

A position was approved for submission to Congress that would require the filing of Form 1065 on March 15, Form 1120S on March 31, and Forms 1040, 1041 and 1120 on April 15.  Extended due dates would be 6 months later for all these forms except Form 1041, which would be extended 5.5 months to September 30.   This would alleviate the problems mentioned above by establishing a logical set of due dates focused on promoting a chronologically-correct flow of information between passthrough entities and their owners.  It would promote the early filing of more business and personal returns and relieve some of the workload compression surrounding the September 15 business return deadline.

On May 17, 2013, AICPA submitted written testimony in support of the due dates provision in the House Ways and Means Committee small business tax reform discussion draft.  On January 16, 2014, the AICPA submitted comments on the due dates proposal in the Senate Finance Committee discussion draft. 
 

 

 

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