AICPA Recommends Change to Return Due Dates 


    Quick linksAICPA Position | Legislative Action | News, Articles and Resources | History and Background | Bill Summary | Chart of Proposed Due Dates | Overview | Talking Points| Summary Chart of 2013 and 2014 Proposals | Analysis of 2014 Proposals

    Taxpayers and preparers have long struggled with problems created by the inefficient timeline and flow of information. 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 current inefficient timeline of due dates is a problem. The proposed legislation 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.

    The AICPA supports the due date propose 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 January 2008, the AICPA recommended that the IRS open a regulation project to address the difficulties taxpayers face when receiving delayed Schedules K-1. A Tax Division task force was formed to explore a more permanent, possibly legislative solution to this problem. Legislation was introduced in 2011 (H.R. 2382, and S.845), and again in 2013 (2/28/13) (H.R. 901 and S. 420) . See the summary and chart of the proposed legislation due dates. In addition, in March 2013, both tax writing committees included this due dates proposal as part of their tax reform discussion papers.

    In March, 2013, House Ways and Means Committee Chairman Camp released a discussion draft for tax reform of small businesses that included as Part 2 - Tax Return Due Date Simplification, and the Senate Finance Committee released a tax reform options paper on Simplifying the Tax System for Families and Businesses that included the due dates proposal as Part II (Filing Process), 1. (Enable the IRS to verify information on taxpayer returns against third-party information as returns are processed), A. A proposal to establish a system of filing deadlines that ensures timely receipt of reliable third-party information by taxpayers and the IRS, for example by changing due dates for returns. AICPA continues to work with Congress to get this legislation enacted.  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.

    Senate Finance Committee released a tax reform options paper on simplifying the tax system for families and businesses - released on March 21, 2013, which included as Part II.1.A. - Establish a system of filing deadlines that ensures timely receipt of reliable third-party information by taxpayers and the IRS, for example by changing due dates for returns (S.420, Tax Return Due Date Simplification and Modernization Act of 2013, sponsored by Sen. Enzi; American Institute of Certified Public Accountants (AICPA), AICPA Recommends Change to Return Due Dates; Testimony of Troy Lewis at the Senate Finance Committee, April 26, 2012).  

    On November 20, 2013, the Senate Finance Committee released a staff discussion draft on tax reform of tax administration provisions, which 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 January 16, 2014, the AICPA submitted comments on the due dates proposal in the discussion draft. 

    On February 26, 2014, House Ways and Means Committee Chairman released a comprehensive tax reform discussion draft "Tax Reform Act of 2014" that included as part of Title VI - Tax Administration and Compliance, Subtitle C - Tax Return Due Date Simplification, Sections 6201-6203 with a proposal similar to the AICPA supported proposal and H.R. 901 and S. 420.

    In March 2014, the President released the Administration's 2015 Fiscal Year Revenue Proposals, which included in the categoy of proposals to reduce the tax gap and make reforms, a proposal to rationalize tax return filing due dates so they are staggered. It contains much of the same due date changes that the AICPA supports and in S. 420 and H.R. 901.

    As the proposed legislation provides, 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

    Extended dues dates for most returns would also change, as follows:
    • Forms 1065, 1120S, 1120 and 1040 would still retain a 6 month extension,
    • Form 1041 would be extended 5.5 months to September 30,
    • Form TD F 90-22.1 and Form 3520-A would be extended 6 months to October 15 (and for the TD F90-22.1, the Secretary of Treasury could waive penalties for first time failure to file an FBAR extension request),
    • Exempt Organizations Forms 990 (series), 4720, 5227, and 8870 would be allowed a 6 month extension to November 15,
    • Employee Benefit Plans Form 5500 would be allowed a 3.5 months extension to November 15, and
    • Form 3520 would be allowed to be extended separately from the owner’s tax return. (proposed in S.420 and HR 901).

    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.


    Legislative Action


    News, Articles and Resources


    History and Background

    Extended return due dates were changed beginning with the 2009 filing year pursuant to regulations which now require all partnerships and trusts with extended calendar-year returns to file by September 15 along with corporations.  This has helped Form 1040 filers who take advantage of the extended due date because they get their Schedules K-1 one month before the October 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 September 15 places an undue burden on practitioners and taxpayers around the September 15 deadline because numerous types of returns are all due at the same time.  The September 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 aren’t the only recipients of Schedules K-1, and (3) partnerships are not the only entity that issues Schedules K-1.  Ultimately, corporations and trusts with partnership interests should have time after receiving Schedules K-1 to file accurate and timely returns.

    See also Overview and Talking Points.




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