Taxpayers and preparers have long struggled with problems created when Schedules K-1 arrive late, sometimes within days of (before or after) the extended due date of many returns and up to a month after the extended due date of business returns. This inefficient timeline makes it difficult, if not impossible, to file a timely, accurate tax return.
The American Institute of CPAs (AICPA) has pushed Congress since 2008 to pass legislation to alleviate the problems created for taxpayers and their return preparers by the untimely receipt of Schedules K-1 and was pleased that the provisions of the due date simplification legislation were included in the tax reform discussion drafts released by the House Ways and Means Committee and Senate Finance Committee.
Senators Mike Enzi (R-WY) and Jon Tester (D-MT) introduced the Tax Return Due Date Simplification and Modernization Act of 2013, S. 420, in the Senate. Congresswoman Lynn Jenkins (R-KS), introduced the House bill, H.R. 901, with Congressman Joe Crowley (D-NY) as the original Democratic cosponsor.
The legislation would ease the problem of receiving late Schedules K-1 information, which often prevents the pass-through owners from filing accurate and timely returns. The proposal creates a logical set of due dates focused on allowing a more timely flow of information from pass-through entities to their owners. It also 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.
As drafted, 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 due 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.
- Form 3520 would be allowed to be extended separately from the owner’s tax return.
The AICPA will continue to work with Congress in order to solve the due date problems faced by taxpayers and tax return preparers.
For more information on the due dates proposal and the discussion draft materials, visit the due dates web page on the AICPA’s website.