In 2015, legislation was enacted that modified the due dates of some types of tax returns, beginning with 2016 tax returns (so tax returns prepared and due during the 2017 tax filing season).
The reason for making the changes was to address concerns that taxpayers and preparers had expressed regarding the timeliness and availability of some types of information needed to prepare individuals’ tax returns – information one certain flow-through entities and on information from employers. For example, under the old rules, partnership and LLC tax returns were due on April 15th (not counting any extensions of time to file). Information on those returns typically flowed through to the personal tax returns of individuals, which were also due on April 15th. Often this resulted in otherwise unnecessary extensions of time to file the individual’s tax returns due to the last minute receipt of partnership or LLC information.
The legislation is also intended to address security concerns expressed by the IRS processing centers as to the filing of fraudulent tax returns and identity theft. In the past, employers filing Form W-2 electronically that listed wage amounts paid to employees for a calendar year weren’t required to file the information with the Social Security Administration and the IRS until March 31st of the following year, even though the employers provided the information to the employees no later than January 31st. Because individuals with refunds coming often file early, often as early as the first couple of weeks of February, this meant that the IRS was paying out refunds where they were unable to verify the tax amounts shown as having been withheld on the individual’s tax return. This provided a window of opportunity for fraudulent returns being filed – estimates of tax-refund fraud are as high as $21 billion. The new due dates ensure that the IRS gets the information at the same time as the employees do and should significantly cut down on fraudulent refund claims.
A chart is included below showing the changes in the due dates for various returns (changes are shown in red). As you’re planning for your tax return preparation needs this coming year, bear in mind the changes in due dates for these entities from which you may receive information. As always, please contact us with any questions.
