The extended deadline for partnership and S-Corporation tax returns was this past Tuesday, and all of our returns were completed and filed that could be (but one). And that one client understood the issues with late filing–but more on that in a moment.
However, we were lucky in that we don’t use software from Wolters Kluwer. Users of that software (such as CCH) could not efile returns on September 15th. That’s an issue when it’s a deadline date. Many years ago, we were impacted when ProSeries (the software we use, made by Intuit) suffered a similar failure on the regular individual deadline date. That year, the IRS extended the deadline by a day. It’s quite possible the IRS will offer such relief to users of CCH this year.
Not only can technology issues happen on a deadline day, but if you wait to the absolute last minute you don’t have time to effectively review the return. This impacted one of our clients. She thought the income number from the partnership should be half of what we’re showing. The numbers on the tax returns exactly match the financial statements, so she needs to review the financials to find the errors. (I did not discover any errors, but she is intimately familiar with the business and errors should stand out more to her.) When you wait to the last day, the clock does strike midnight. She elected to file her return late (possibly using First Time Abatement to avoid penalties) as she wants her return to be correct.
We’re less than two weeks away from the extended deadline for trusts and estates and less than a month away from the extended deadline for individuals. Now is a very good time to send those last documents to your tax professional (indeed, our deadline to guarantee returns are timely prepared was earlier this week). It’s not yet time to panic (except for trusts and estates), but it soon will be for individuals. If you haven’t gotten everything together, you really need to start now. The penalties for late filing are severe, and if you don’t file by October 15th (unless you reside in one of the federal disaster zones) are severe (25% late filing penalty). It’s not a day late and a dollar short; it’s a day late and lots of dollars short.
Tags: 2020.Tax.Season