In the Thick of It: Why Tax Return Due Date Changes Matter to Us and Should Matter to You, Too
Feb 22, 2017
Due to legislation passed in 2015, in conjunction with support from the AICPA (American Institute of CPAs), the deadlines for a variety of federal tax filings have been adjusted beginning with the 2016 tax year (due dates beginning in 2017). While this matters to many business owners, trustees and executives, keep in mind that the legislation does not affect the deadline that stands out to many individual taxpayers – the April 15 due date for personal income tax returns.
The IRS hopes to take pressure off of tax preparers by improving gaps between a particular filing’s due date and the need for receiving information from a different return filing. In the past, these returns were due on the same date, and as you can imagine, created a headache for preparers and taxpayers alike. Tax return deadlines help foster project timelines for preparing returns, however certain changes will allow accountants to better serve your needs, while also benefiting the taxpayer, who will now have more time to gather information and collaborate with his or her tax preparer.
Although the subject matter of tax return deadlines is certainly not at the top of anyone's top 10 list, it is important information to know. The deadlines mentioned below apply to calendar year-end taxpayers. As you would anticipate the deadlines typically shift accordingly for fiscal year-ends.
- Partnerships and most Limited Liability Companies: Deadline shifts earlier from April 15 to March 15. The six-month extension period will end September 15. In this case, companies lose preparation time. This year, be sure you give yourself ample time to get your financial statements and documentation to your CPA firm, something they’ll likely recommend, as well.
- S Corporations: Deadline remains March 15 with a six-month extension to September 15. In an S Corporation, amounts paid to shareholders may be reported as either distributions or salary so the IRS may scrutinize payments with a closer lens. Be sure to discuss any potential planning ideas such as the classification of shareholder payments from the S corporation with your CPA firm or tax preparer.
- C Corporations: Returns long due on March 15 will now be due on April 15 with extensions to September 15. Remember, C Corporations feature two levels of taxation – one at the corporate level and the other at the shareholder level. This means that more effort and planning can go into the filing process. Fortunately, this change means your CPA firm will have more time to prepare your filing.
- Trusts: Deadline of April 15 remains the same but extensions will be accepted until September 30. This provides an extra 15 days compared to what is currently in place. This means your CPA firm will have more time to prepare your return, but will likely still rely on information from you based on the deadlines you were previously operating under.
- Employee Benefit Plans: Returns will still be due July 31, but extensions will now be available up to three-and-a-half months later, or November 15.
- Exempt (Non-Profit) Organizations: Returns will still be due May 15, but tax-exempt entities can file for an automatic six-month extension until November 15. In the past, only a three-month extension was guaranteed, so this is good news for all parties involved.
- Foreign Ownership of Bank Accounts: Individuals and businesses with foreign ownership (financial interest) or signing authority on foreign bank accounts should already be familiar with the FinCEN Form 114, which was previously due on June 30 and were not extension-eligible. The due date is now earlier, on April 15, but taxpayers will be allowed a six-month extension for the first time, which is also a win for both tax preparers and taxpayers. Additionally, penalties can be very steep if your business does not file or files improperly. Fortunately, by letting your CPA firm know that you have a foreign bank account, they can guide you through the process of filing properly and on time.
While these new deadlines positively impact tax preparers and taxpayers alike, an entity may need to adjust its internal workflow to prepare the information required for their tax filings. On the other hand, certain entities will have 30 days less to prepare for their filings in 2017. For the most part, these changes give CPA firms or internal CPAs more time, however, you’ll need to be aware of these deadlines since your tax preparer may require earlier dates for you to provide required financial information.
Founded in 1962, Weinstein Spira is a highly respected firm of experienced tax, audit, business management and estate planning advisors who proactively serve discerning, privately held businesses and leaders in the Houston area and beyond. More information about the firm can be found at www.weinsteinspira.com.