New Tax Due Dates Create More Logical Information Flows
Monday, August 24, 2015
Posted by: Amy Spencer
On July 31, President Obama signed into law a short-term highway funding extension that contained important due date modifications for several common tax returns, including partnerships and C corporations. PL 114-41 is the culmination of a longstanding effort by the AICPA and state CPA societies to eliminate the awkward chronology for many returns.
Under the prior due dates, taxpayers and practitioners often had insufficient time to prepare returns because required information from a flow-through business was not available before the taxpayer’s income tax return was due. The idea behind the changes is to have flow-through returns completed before the returns in which the flow-through information is reported for the recipients – in forms 1040 and 1120, for example. Taxpayers and their preparers will now have time to receive and analyze the flow-through information before reporting it in other filings.
Most of these changes are ones that the AICPA and state CPA societies have been advocating for several years. The effort centered on urging a more logical flow of information that would help taxpayers and tax professionals file timely, more accurate returns. In articles, social media posts and personal appeals to other members, about 200 AICPA and state society members volunteered their time to communicate the profession’s concerns. Discussions also were held between representatives of the profession and officials from the Internal Revenue Service and Treasury.
“This legislative victory is proof that persistence yields results,” says Susan Speirs of the Utah Association of CPAs. “It just makes sense to complete flow-through returns before individual and corporate returns are due so that the required information is available. This victory is part of the profession’s overall effort to help alleviate the crunch that occurs every tax filing season.”
Among the changes, the new due date for C corporations generally will be the 15th day of the fourth month following the close of the corporation’s year (i.e., April 15th for calendar year C corporations). Currently, these returns are due on the 15th day of the third month following the close of the corporation’s year.
In some cases, due dates have been moved up. For partnership returns, the new due date will be the 15th day of the third month following the close of the taxable year (i.e., March 15 for calendar year partnerships). Currently, these returns are due on April 15 for calendar-year partnerships.
It’s important for practitioners to note that the new law generally provides 6-month extensions (five and a half months for trusts), mitigating possible disruptions from the new due dates. The new law also provides for additional extensions not previously allowed. The due date for FinCEN Form 114, for example, will change from June 30 to April 15 to align with Form 1040 filings, and under the new law, Form 114 taxpayers will be allowed an extension, which was not previously permitted. That extended date, October 15, is also aligned with the Form 1040 extension.
“This is a terrific result, but we are not stopping here,” says Speirs. “Taxpayers and preparers still face a host of other workload compression challenges. The Utah association is working with the AICPA to find ways to address common complaints about the current due dates for other forms, including Form 1099s that taxpayers need in order to file their tax return. We will continue to work with them to help address these issues.”
For a complete list of the recent due date changes, download this chart.