State filing one month after federal: AICPA resources for state CPA societies.

• Author: Gallegos, Mark

Along with other tax policy and advocacy organizations, the AICPA has been developing and providing resources to state CPA societies interested in encouraging states and their tax authorities to make state business income tax returns due one month after the applicable federal return due date. (1) Currently, many states' due dates coincide with the federal due dates, which does not allow taxpayers and practitioners sufficient time to prepare state returns. Other organizations collaborating in this effort include the Council On State Taxation (COST), Tax Executives Institute (TEI), the Federation of Tax Administrators (FTA) and various state CPA societies. This column outlines the problem, surveys states' recent law changes and relief provisions, and provides resources that state CPA societies and others can use for continuing advocacy.

Background/problem

Approximately half of all states still require business entities (C corporations, partnerships, and S corporations) to file income tax and information returns on the same date as the federal return. In these states, taxpayers and practitioners may not have adequate time after filing their federal return to prepare the state returns. This extra time often is needed to accurately file the state return by making adjustments to calculate taxable income and correctly apportion that taxable income to one or more states. Federal and state law changes, along with the COVID-19 pandemic (including issues arising from many practitioners and employees working remotely), have made gathering state tax information more difficult and time-consuming.

Proposed solution by the AICPA, COST, and TEI

The organizations recommend that states allow at least one month after the federal due date before requiring the state return to be filed and that the extra month for state purposes should be provided automatically if there is a valid extension for federal purposes.

Recent progress

The 11 states listed in the table "Recent State Changes" on p. 60 changed their return filing due dates in recent years. See the map "One Month State Filing After Federal Filing of Corporate Income Tax Returns" on p. 62 for states having an original and/or extended corporate return due date at least one month after that of the federal return.

States that currently do not provide at least one month after the federal filing due date

A list of states whose extended due dates are less than one month after the federal due date is on p. 61 (see the table "States With Due Dates Needing Change"). An interpretation of current law may be that some states are restricted from extending the due date because their statute does not allow discretion and the statute would need to be updated. Some state laws allow discretion on due dates, but the state tax authorities would need to change rules or regulations to allow additional time to file returns.

* Corporations: Nineteen states remain with extended due dates that are less than one month after the federal due date (Oct. 15 for calendar-year taxpayers).

* Of those 19 states, nine (Delaware, Georgia, Iowa, (2) Massachusetts, Mississippi, New York, North Carolina, Rhode Island, and West Virginia) have some amount of discretion to change due...