IRS Shortens Extension Period for Certain Businesses

The IRS this week announced it has shortened the extension period for filers who have to report on documents affecting partnerships, S corporations, estates and trusts.

Income, deductions and credits from partnerships, S corps, estates and trusts are reported to partners, investors and beneficiaries on Schedules K-1 (pdf) and other similar statements. The recipients then use that information to complete their own tax returns.

The agency has reduced the extension period from six to five months, saying it will ease the burden on taxpayers who must file K-1 and similar documents on their individual tax returns.

The extended due date for businesses and individuals currently falls on the same date, which is usually Oct. 15. However, the IRS said that has been problematic for individual taxpayers who rely on the information from Schedule K-1 and other similar statements to prepare their personal tax returns on time.

"We are eliminating the same-day deadline for these returns, which causes needless hardship and puts the individual taxpayer in an awkward position," said IRS Commissioner Doug Shulman in a statement. "We want to correct this timing issue to ensure that all taxpayers have the information they need to file timely and stay in compliance with the law."

The change will be effective for extension requests with respect to tax returns due on or after Jan. 1, 2009, and applies to business entities that file the following returns and forms that have a tax year ending on or after Sept. 30, 2008.

By Sharon McLoone |  July 3, 2008; 12:00 PM ET Tax Tips
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