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
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
, and in March 2015, the President released the Administration's 2016 Fiscal Year Revenue Proposals
, both of 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. They contain 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: