The New Due Dates: Effective for 2017 Filing Season

Below is a list of the new federal due dates generally applicable for 2016 tax returns (2017 filing season) and beyond.²

March 15 (Extensions Until Sept. 15)

• Form 1065, U.S. Return of Partnership Income; and
• Form 1120S, U.S. Income Tax Return for an S Corporation.

Note: This is the due date for the tax return and also for the Schedules K-1 that the entity must provide to its owners.

April 15 (Extensions Until Oct. 15, Unless Noted Below)

• Form 1040, U.S. Individual Income Tax Return;
• Form 1041, U.S. Income Tax Return for Estates and Trusts (extensions until Sept. 30);
• Form 1120, U.S. Corporation Income Tax Return (extensions until Sept. 15 until 2026, see note below); and
• FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR) (any late filing penalty for a first-time filer may be waived).

Note: Calendar-year C corporations can get extensions until Sept. 15 until tax years beginning after 2025, when the extended due date will be Oct. 15. June 30 fiscal-year-end C corporations (returns due Sept. 15) can get extensions to April 15 until tax years beginning after 2025; after 2025, June 30 fiscal-year-end C corporations will have an Oct. 15 due date and can get extensions until April 15.

May 15 (Extensions Until Nov. 15)

• Form 990, Return of Organization Exempt From Income Tax (series).

July 31 (Extensions Until Oct. 15)

• Form 5500 for employee benefit plans.

Note: The Form 5500 extension due date of Oct. 15 remains unchanged. The Surface Transportation Reauthorization and Reform Act of 2015,³ signed into law on Dec. 4, 2015, repealed the employee benefit plan Form 5500 extension provision in the July 2015 highway bill, which had provided a 3½-month filing extension until Nov. 15. As requested by the U.S. Department of Labor, the result of the Form 5500 extension provision in the December 2015 Act is that the Form 5500 extension is back to 2½ months, due on Oct. 15. Note that there was a negligible revenue effect from the Form 5500 due date extension as no tax payments are made with filing this return.⁴

Other Forms That May Be Affected

Although the legislation does not go into detail about due dates for various other forms, it should be noted that forms that are tied to the due dates of the above forms will need to be revised accordingly. For example, Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, will likely be changed to coincide with the corresponding return’s new due date. Some other forms that are likely to be changed to go along with the corresponding return’s new due date are:

• Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation;
• Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business (Under Sections 6038A and 6038C of the Internal Revenue Code);
• Form 8804, Annual Return for Partnership Withholding Tax (Section 1446);
• Form 8805, Foreign Partner’s Information Statement of Section 1446 Withholding Tax;
• Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities;
• Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships; and
• Form 8886, Reportable Transaction Disclosure Statement.

State Tax Return Due Dates

Many states are likely to follow the above federal due date changes but may need to enact legislation (or issue regulations or guidance from the state departments of revenue) to change their due dates to conform to the new federal dates. As of this writing, due dates conformity legislation had been enacted in Alabama, Arizona, Florida, Georgia, Maryland, Mississippi, New Hampshire, New Mexico, New York, Oklahoma, Oregon, South Carolina, Utah, and West Virginia.⁵ California is considering due date legislation.⁶ During 2016, the state CPA societies likely will be working with their legislatures and departments of revenue on any needed and desired state due date changes before the 2017 filing season implementation of the federal due date changes.

In particular, states should consider making sure the state corporate tax return is not due before the new federal corporate due date of April 15. Otherwise, CPAs may need to prepare state tax returns based on incomplete federal information. Also, states may want to consider aligning the partnership due dates to the new federal due date of March 15.

States that might want to consider changes to the state corporate tax return due date include Illinois, Massachusetts, New Hampshire, Ohio, and Wisconsin, as well as the District of Columbia. Some states, such as Alabama, may require only a regulatory rule or guidance change from the state revenue departments to change their due dates.

The Problem With the Prior-Law Due Dates

As part of the AICPA Tax Division advocacy process, in 2008, members started voicing concerns that taxpayers and preparers were struggling with problems created when flowthrough entities’ Schedules K-1 arrived late, sometimes within days (before or after) of the extended due date of their partners’/owners’ personal returns and up to a month after the extended due date of their partners’/owners’ business returns. Late Schedules K-1 made it difficult, if not impossible, to file a timely, accurate return. The Tax Division found that much of the issue related to late Schedules K-1 were a result of the increasing quantity and complexity of flowthrough entities.⁷

Specifically, since January 1997, when the check-the-box⁸ regulations became effective and “eligible” entities found it easier to file as partnerships, the formation of new limited liability companies (LLCs), limited liability partnerships, and similar state law entities (collectively, LLEs) resulted in a dramatic increase in the number of partnership returns being filed. Understandably, this situation increased the number of individuals and entities, including C and S corporations, and trusts and estates, relying on information from partnerships and other flowthrough entities in determining taxable income.

In addition to the increase in the number of flowthrough entities, the AICPA Tax Division observed that the use of tiered partnership structures also increased over the past decade—and with it the complexity of tax compliance—by vehicles such as hedge funds, master limited partnerships, business trusts, series LLCs, and private equity. Further, the increased complexity of the Code and other tax laws has resulted in the need for significantly greater information gathering and analysis. In this new environment, practitioners and taxpayers often found that the prior-law ordering of tax return due dates for partners (i.e., individuals, C corporations, S corporations, trusts, or other partnerships) and partnerships made the timely filing of complete and accurate returns difficult. In far too many cases, the ultimate owner of a partnership interest did not obtain the information needed to prepare tax returns on a timely basis. Increasingly complex partnership transactions and reporting requirements added to return preparation time as additional time for analysis has been needed to ensure accuracy.

The interconnection of business entities and those who own them demanded a more logical flow of information between parties. Individuals, C corporations, S corporations, trusts, and other partnerships often are investing in, or operating, partnerships and, if they do, require Schedules K-1 (Form 1065) before completing their returns. Many partners often have been forced to seek extensions, a matter further complicated by the fact that partnerships themselves sometimes also seek extensions.

The AICPA advocated for this change in the due dates to:

• Address many of the problems that had been facing taxpayers and tax professionals;
• Improve the tax return filing process;
• Improve the accuracy of tax and information returns by allowing corporations and individuals to file using current data from flowthrough returns that have already been filed rather than relying on estimates;
• Better facilitate (versus the prior-law system mismatch of) the flow of information between taxpayers (i.e., corporations, partnerships, and individuals);
• Promote earlier filing of more business and individual returns and reduce the need for extended and amended corporate and individual tax returns;
• Enable earlier filing of final flowthrough returns as tax resources can be redirected from non-publicly traded C corporations to flowthrough entities, whose returns would be due well in advance of those corporations; and
• Significantly simplify tax administration for the government, taxpayers, and practitioners.

Why the New Due Dates Are Helpful

The new law, which has the partnership Form 1065 as the first return due, is both logical and helpful to many types of entities because all other entities and individuals can be partners in a partnership and thus may need (and will have starting in the 2017 filing season) information from Schedules K-1 from partnership investments to timely and accurately complete their tax returns. Note that practitioners and partnerships that need more time to complete the partnership tax return will still be able to extend the return until Sept. 15.

Once partnership and S corporation returns have been filed by March 15, and owners have received their Schedules K-1, individuals, trusts, and C corporations will have the information they need from their passthrough entity investments to file accurate and timely returns. Trusts will have two more weeks after receiving extended partnership and S corporation Schedules K-1 to complete their extended returns and issue their extended Form 1041 Schedules K-1 to beneficiaries, who will have an additional two weeks to complete their extended personal returns. In addition, taxpayers with foreign accounts will have all the information needed to complete FinCEN Form 114 at the same time as the individual tax return due date and extension.

C corporations will largely benefit from the new due dates of April 15 and Oct. 15 (calendar-year corporate extensions change to Oct. 15 after 2025).⁹ Many C corporations previously needed to extend their returns because they were waiting on audited financial statements, which typically arrive by the end of March. These corporations may no longer need to extend the income tax return, filing by the new original due date of April 15 (or the 15th day of the fourth month following the close of the tax year for most fiscal-year corporations). Note that the due dates for estimated tax payments do not change.

What Does It Mean for Practitioners and Taxpayers?

Workload compression was a major consideration for the member-driven Tax Division in working toward a more logical flow of information between taxed entities. In developing its ultimate proposal, the Tax Division surveyed more than 30,000 AICPA members and worked closely with a task force, several technical resource panels, and many state societies. In the end, it became clear that based on the IRS’s administrative constraints, a perfect solution (for all practitioners and taxpayers) would not be possible; however, taken as a whole, the AICPA thinks that the new law is better than the prior-law due dates.

As the AICPA developed the legislative proposal, it became apparent that a due date change to achieve most of the desired outcomes would mean shorter deadlines for some entities and extended due dates for others. Some members may experience “growing pains” as they work to retrain their clients and reorder some of their internal staffing. However, the hope is that over a short period of time, CPAs and their clients will be able to adjust to the new filing dates and that extensions may help practitioners balance all the returns they need to file. Overall, the new law should produce a more logical flow of information for practitioners and clients.

For the 2017 filing season and beyond, taxpayers and practitioners should start to see that they have timely and accurate information needed from flowthrough entity Schedules K-1. Taxpayers and practitioners should no longer need to deal with so many estimates, extensions, and amended returns. The tax return preparation process should be smoother and more efficient.

Practitioners preparing extended Form 1041 trust and estate income tax returns will welcome the additional two weeks to Sept. 30 (compared with the current Sept. 15 extended deadline) to complete extended Forms 1041. This trust delayed extension date (and the eventual Oct. 15 corporate extension) will also help in spreading the current nightmare of Sept. 15 extensions workload for many practitioners.

Taxpayers with foreign bank accounts will be able to file their ­FinCEN Report 114 when they have the information needed and are filing their personal income tax return, including being able to extend it until Oct. 15. This is a welcome change from the former June 30 deadline that was unrelated to any other tax deadline and did not allow extensions.

In addition to the improved logical flow of information, practitioners who file Forms 990 will find the extension process to be simplified, eliminating the need to file two extension requests.

Over the next year, the IRS should be updating the relevant regulations as the legislation instructs the Service to modify existing regulations and provide guidance for implementing the new due dates. Practitioners may want to review the forthcoming guidance when the IRS releases it.

The Continuing Issue of Late and Amended Forms 1099

The AICPA advocated on another due date-related issue. Many brokerage firms have been issuing late and amended Forms 1099, which has become an increasing problem and a frustration for taxpayers and practitioners as they often require filing an amended return. This unfortunate trend has prompted some taxpayers to wait until they receive their anticipated corrected Forms 1099 before taking their tax records to their CPA. The result is that many taxpayers provide tax return data to preparers later than in prior years to avoid having to file amended returns.

This trend forces tax preparers to navigate an increasingly compressed filing season in which they sometimes receive necessary information less than two weeks before the initial filing due date. Late Forms 1099 create anxiety, confusion, and potential complications in the tax preparation process, and, for some taxpayers, they can cause increased tax preparation fees.

Taxpayers often request the practitioner prepare an amended Form 1040 immediately upon receiving a corrected Form 1099 either to make certain they do not owe any late-payment penalties or to obtain their refund as soon as possible. Taxpayers also are often eager to get the current-year tax return filed without extensions, if possible.

Form 1099 Due Dates

Currently, Forms 1099 (e.g., Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, and Form 1099-DIV, Dividends and Distributions) generally are due to the IRS and Social Security Administration (SSA) on Feb. 28 (March 31 if filed electronically) and are due to taxpayers by Jan. 31 (Feb. 15 for Forms 1099-B, 1099-S, Proceeds From Real Estate Transactions, and 1099-MISC, Miscellaneous Income (if amounts are reported in box 8 or 14)). Several brokerage firms have been able to get extensions. Brokerage firms can amend and issue corrected Forms 1099 at any time.