Overview on Due Dates Legislation 


    Background

    Taxpayers and preparers have long struggled with problems created when Schedules K-1 arrive late, sometimes within days (before or after) of the extended due date of their personal returns and up to a month after the extended due date of their business returns. Late Schedules K-1 make it difficult, if not impossible, to file a timely, accurate return. An example of the problem is when an individual partner receives a late Schedule K-1 as an investor in a limited partnership. The partnership return is due on April 15. Individual returns are also due on April 15. The partnership return includes a Schedule K-1 that must be delivered to each partner so they can prepare their personal returns. The partnership completes its return and delivers the Schedule K-1 to the partner on April 15. The individual partner does not have enough time to incorporate that information into their personal return and still file “on time”. So, they have no choice but to file for an extension.

    Extended return due dates have been recently changed pursuant to new regulations which now require all Schedule K-1 issuers (along with C corporations) to file calendar-year returns by Sept. 15. This has helped Form 1040 filers taking advantage of the extended due date because they get their Schedules K-1 one month before the Oct. 15 extended filing 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. Further, business return filing schedules are still problematic because original corporate return due dates are one month prior to when the Schedules K-1 are received and their extended returns are due the same day as the extended due date of the returns of the Schedule K-1 issuers.

    Having all business and trust returns due Sept. 15 places an undue burden on tax practitioners and taxpayers because numerous types of returns are all due at the same time. The Sept. 15 due date also fails to address the fact that

    1. properly changing original due dates can create an incentive for a reduction in the overall number of return extensions,
    2. individuals are not the only recipients of Schedules K-1, and
    3. partnerships are not the only entities that issue Schedules K-1. 
    Ultimately, corporations and trusts with partnership interests should have time after receiving Schedules K-1 to file accurate and timely returns.

    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 seven-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. 

    AICPA Position

    The Task Force approved a position 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 six months later for all these forms except Form 1041, which would be extended five and half months to Sept. 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 workload compression surrounding the Sept. 15 business return deadline.

    • Feb. 28, 2013, Senators Mike Enzi (R-WY) and Jon Tester (D-MT) introduced S. 420 and Rep. Lynn Jenkins (R-KS) and Joe Crowley (D-NY) introduced H.R. 901, the Tax Return Due Date Simplification and Modernization Act of 2013.
    • March 12, 2013, Rep. Dave Camp (R-MI), the Chairman of the House Ways & Means Committee, released a small business tax reform discussion draft that included as Part 2 – Tax Return Due Date Simplification. On May 17, 2013, the AICPA submitted written testimony in support of the due dates proposal in this small business tax reform discussion draft.
    • March 21, 2013, the Senate Finance Committee released a tax reform options paper on simplifying the tax system for families and businesses that included as Part II.1.A. – Establish a system of filing deadlines that ensures timely receipt of reliable third-party information for taxpayers and the IRS, for example by changing due dates for returns.
    • Nov. 20, 2013, Sen. Max Baucus (D-MT), the Chairman of the Senate Finance Committee, released a staff discussion draft on tax reform of tax administration provisions that included as Subtitle F—Improvements to Tax Filing, Sec. l51. New due date for partnership Form 1065, S corporation Form 1120S, and C corporation Form 1120. On Jan. 16, 2014, the AICPA submitted a letter noting the due dates proposal in this tax administration provisions tax reform discussion draft.



    Current and S. 420 and H.R. 901 Proposed Due Dates – Calendar Year Returns

    RETURN TYPE

    FORM

    CURRENT DUE DATES (Original and Extended)

    PROPOSED INITIAL

    DUE DATE

    PROPOSED

    EXTENDED

    DUE DATE

    Partnership

    1065

    April 15

    September 15

    March 15

    September 15

    S Corporation

    1120S

    March 15

    September 15

    March 31

    September 30

    Trust and Estate

    1041

    April 15

    September 15

    April 15

    September 30

    C Corporation

    1120 Series

    March 15

    September 15

    April 15

    October 15

    Individual

    1040

    April 15

    October 15

    April 15

    October 15

    Employee Benefit Plan

    5500

    July 31

    October 15

    July 31

    November 15

    Exempt Organizations

    990 Series, 4720, 5227, 6069, 8870

    May 15

    August 15

    November 15

    May 15

    November 15

    Foreign Bank Account

    Reporting

    Form TD F 90.22-1

    June 30

    October 15*

    N/A

    Foreign Trusts with a U.S. Owner

    3520-A

    March 15

    April 15

    October 15

    Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts

    3520

    April 15

    October 15 (with owner’s tax return extension)

    April 15

    October 15 (can be extended separately from owner’s tax return)


    * Current law due date is June 30.  The AICPA supports eliminating the current June 30 deadline in favor of a single, October 15 due date.  In the alternative, we support leaving June 30 as an original due date with Oct.15 as an extended due date.

     




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