The Internal Revenue Service will be making some changes in the due dates next year for several types of business tax returns, which should give accountants a little extra breathing room.
“In general I think most CPAs are looking forward to the changes,” said Texas Society of CPAs chair Allyson Baumeister, who is also a principal in charge of the Forth Worth office at CliftonLarsonAllen. “The purpose of them is to spread out the workload a little bit, particularly as it pertains to flow-through entities, so that the flow of K-1s works better. Entities that generate K-1 flow-through activity will be due before C corps and 1040s that receive that K-1 information. I think we’re all looking forward to seeing how it works, and we’re very hopeful it will help with the compression issues.”
Partnership tax returns will be due March 15 instead of April 15. If the partnership isn’t on a calendar year basis, the return is due on the 15th day of the third month following the end of the tax year.
C corporation tax returns will be due April 15 instead of March 15. For non-calendar year corporations, the tax return will be due on the 15th day of the fourth month following the close of the tax year. C corporations with tax years ending on June 30 will continue to have a due date of September 15 until 2025. After Dec. 31, 2025, the due date for these returns will be October 15.
“Partnerships and C corporations are basically switching places,” said Baumeister. “The partnership returns will be due first and then extended so that partnership K-1s can flow into C corporation returns and into individual returns, and there’s more time in between those partnership returns being filed and the C corp and 1040s being filed. For this filing season that we’re in, on extension partnership returns will be due September 15 and calendar year C corporation returns are due September 15 as well. Sometimes that makes it impossible for the C corporations to file with correct data if they don’t receive that K-1 until their own due date. So now the C corporation returns will be due in October, and that gives those entities a month after receiving those K-1s to be able to finish their returns and have all of the data needed.”
Some individual tax filers will also be affected by the new due dates, particularly those who need to file foreign bank account reports. The due date for FBARs will move from June 30 to April 15. FBAR filers will now also get a six-month extension, just as they do for a tax return. The extension dates for trust returns are also changing.
“Trust returns are still going to be due in April, but they’re going to be extended,” Baumeister explained. “Instead of September 15, they’ll be extended to September 30, so that allows those trusts to receive partnership K-1s September 15 and to be able to give them a couple of weeks to file. Then when they file the K-1s that flow into 1040s, there’s a couple of weeks before 1040s have to file. It’s still pretty compressed, but it requires the K-1 flow—on extension in particular—to work a little bit better.”
Baumeister predicts most accounting firms will be able to adjust easily to the changes next year.
“This came out in the summer, and we will have had a year and a half to prepare for it,” she said. “That will give us a lot of time. The IRS usually gets the forms out in time, by the end of January at the latest. It should work well, I think, for everyone.”
Congress changed the due dates in a highway funding bill last July (see Congress Changes Business Tax-Filing Due Dates). The American Institute of CPAs had lobbied Congress for the changes and enlisted the help of several state CPA societies, including the TSCPA, to press for the new due dates.
“We as a group have been working on this for quite a while, and we’re very happy that it actually passed,” said Baumeister.
Still, there have been a few complaints about the new due dates from tax preparers. After all, while the changes may mean less compression during busy season, there may instead be more compression of vacation season.
“Some people just don’t like change at all,” said Baumeister. “For some, it extends the extension deadlines a little bit. For trusts, it’s two extra weeks, and for C corps it’s an extra month. Some preparers think that just means they’ll stay busier longer, but I think most preparers will like the spreading out of it a little bit more. Right now entities, except 1040s, are due September 15 on extension, and that’s really difficult when you’ve got S corps and C corps and partnerships and trusts all due on the same day. The due dates make the extension season pretty compressed, so I think for the most part most CPAs will like the spreading out of those due dates a little bit more.”