September 15th – Tax Return Deadline for Partnership, S-Corp and Trusts

It’s that time again – September 15, 2015, is the extended due date for filing those returns.

Pass-through entities such as Partnerships, S-corporations, and fiduciaries (trusts, estates) pass their income, deductions, credits, etc., through to their investors, partners, or beneficiaries, who in turn report the various items on their individual tax returns. Partnerships file Form 1065, S-corps file Form 1120-S, and Fiduciaries file Form 1041, with each partner, shareholder, or beneficiary receiving a Schedule K-1 from the entity that shows their share of the reportable items.

Because the automatic extension period for partnerships and trusts is set at five months, it provides individual taxpayers with a month’s grace period to complete their individual 1040 returns. You may remember that the original due date for calendar year S-corporation returns was March 15, and they are allowed a 6-month extension period, making the due date for these returns also September 15. Thus, individual S-Corp shareholders also have a month to finish up their individual returns.

Penalties can be substantial.  For example, if you are an S-corporation or partnership and fail to file on time, you are liable for a monthly penalty equal to $195 times the number of persons who were partners, or shareholders for S corps, during any part of the taxable year, for each month or fraction of a month for which the failure continues. Additionally, a $100 penalty may be imposed on the partnership or S-Corp for each Schedule K-1 that it fails to timely provide to partners or S-Corp members (maximum penalty per year is $1.5 million). Trusts are subject to a penalty of 5% of the tax due for each month, or part of a month, for which a return is not filed up to a maximum of 25% of the tax due. A $100 per beneficiary penalty may also apply for failure to timely provide a Schedule K-1. Each beneficiary, who receives a distribution of property or an allocation of an item of the estate, is required to be provided a Schedule K-1.

If we are waiting for some missing information to complete your pass-through return, we will need that information at least a week before the September 15 due date. Please contact us immediately if there are anticipated complications related to providing the needed information so a course of action can be determined to avoid the potential penalties.