As we approach the 2017 tax filing season, it is important to note new tax filing deadlines which go into effect. The new filing deadlines, effective for tax years beginning after December 31, 2015, were passed as part of The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 which was signed into law in July 2015. The American Institute of Certified Public Accountants (AICPA) advocated for many years that change was needed as practitioners struggle every filing season to meet compressed deadlines made worse by late receipt of partnership Schedules K-1. The purpose of the change is to spread the workflow particularly as it relates to flow-through entities.
Partnership tax returns will now be due 2 1/2 months after the close of the tax year. For calendar year partnerships, this means that they will be due March 15 instead of April 15. Under the new law, partnerships will have a longer extension period; a maximum of six months rather than the current five-month extension period. Thus, the extended due date for partnership returns is not changing and remains September 15 for calendar year partnerships.
No changes have been made for S corporation tax return due dates. S corporation tax returns will continue to be due 2 1/2 months after the close of the tax year. For calendar year taxpayers, this means S corporation returns will continue to be due March 15 with an extended due date of September 15.
The new deadline for C corporations to file income tax returns is 3 1/2 months after the close of the tax year. For calendar year taxpayers, this changes the due date of C corp returns to April 15 instead of March 15. C corp due dates have special transition rules through 2026. Under the new law, C corps are generally allowed an automatic five-month extension; thus, the due date for extended calendar year C corps will continue to be September 15 until 2025. After December 31, 2025, C corps will be allowed an automatic six-month extension period, so the extended due date for C corps will change to October 15.
C corps with tax years ending on June 30 are not subject to the new due dates until tax years beginning after December 31, 2025. For now, June 30-year end C corps will continue to be due September 15 with an extended due date of April 15 until 2025. After December 31, 2025, the due date for C corps with June 30 year ends will change to October 15 with the extended due date remaining April 15.
Trust tax returns will continue to be due April 15. However, instead of being extended to September 15, trusts will be allowed an extension until September 30.
No changes have been made to individual due dates. Individual tax returns remain due April 15 with an extended due date of October 15.
The due date changes will be helpful to many types of entities as they can be partners in a partnership return and need information from Schedules K-1 in order to timely and accurately prepare their own tax returns. Previously, it was problematic with partnerships, S corporations, corporations, and trusts all being due September 15 on final extensions. It was common to receive a partnership K-1 which fed into another partnership, corporate, or trust return on or only a few days before September 15 making it extremely difficult if not impossible to allow for adequate preparation time.
Hopefully with partnership and S corporation returns due March 15, owners (whether individual, trusts, or C corporations), will have the information they need to file timely and accurate returns. Many C corps previously had to extend their returns because they were waiting on audited financial statements which typically are completed by the end of March. These corporations may no longer need to extend their income tax returns as they may be able to file by the new due date of April 15. Trusts should be in a better position as they will have two additional weeks to complete their extended returns and issue beneficiary K-1’s after receiving K-1’s from extended partnership and S corporation returns.
Despite the fact that the new tax return filing due dates will be more logical and spaced out, one hold-up to the possibility of not having to extend certain tax returns will be brokerage 1099’s. Late and amended Forms 1099 by brokerage firms have been an increasing issue. Form 1099’s are required to be filed by January 31 this year. Although a brokerage firm can apply for an extension of time to file Form 1099, it remains unknown whether an extension will be granted. Regardless, it is suspected that the number of amended 1099’s will increase during the 2017 tax filing season.
For taxpayers required to file a Foreign Bank Account Report (FBAR), the new law changes the due date to April 15. Formerly FBARs were due June 30 with no extension allowed. FBARs will now be due April 15 and are permitted a six-month extension. This aligns the FBAR due dates with individual reporting.
Form 990, filed by exempt organizations, will continue to be due May 15; however, the new law simplifies the 990 extension process by allowing an automatic six-month extension to November 15. This eliminates the need to file two extension requests for 990’s.
Some states have already conformed to the new filing due dates and many others are expected to enact new legislation or issue regulations or guidance regarding the new rules. States will need to consider conforming to the new federal partnership due date of March 15. States should also consider making sure that the state corporate return is not due before the new federal corporate due date of April 15.
For tax returns filed for tax years beginning after December 31, 2015, new due dates should lessen the compression faced by practitioners during the peaks of busy season. Practitioners are optimistic that the due date changes will ultimately allow for more time to prepare timely and accurate returns particularly where flow-through entities are involved.