Blogging Beyond the Numbers
The Internal Revenue Service has changed the due dates for a number of returns relevant to cooperatives. The primary driver for this was moving up the partnership due date so that K-1s are made available to individuals in time to file their 1040 without extensions. A secondary issue was moving back the corporation due date one month. Most corporations extend their returns so the initial due date is less important than for many other returns.
New Due Date for 2016 Form 1120-C
Cooperatives that file Form 1120-C will have the initial due date moved back from 2.5 months to 3.5 months for all tax returns (except for June year ends which stay at 2.5 months until 2026). The extended due date also moves back a month to 9.5 months after year end for all year ends.
As an example, for a calendar year cooperative the initial due date will now be April 15th and the extended due date will be six-months later on October 15th. For June year end cooperatives the due dates will stay at September 15th and the extended due date will be seven months later on April 15th. The likely reason for the June year end due date not changing is related to the federal government having a September 30th year end. They wanted the tax payments for the September 15th due date to count in the earlier fiscal year.
State Due Dates for Cooperatives Filing Form 1120-C
The above new due dates only apply to the federal 1120-C. Your home state will have its own due date requirement. Some states have not changed their due dates making some state returns due at 2.5 months after year end while the federal return is due 3.5 months after year end. The extended due dates may also differ.
Cooperative Due Date When Patronage Is To Be Paid
There is an exception that cooperatives can use to skip the initial due date for Form 1120-C and only adhere to an 8.5 month due date. This is stated in IRS Code 6072(d) and applies to a cooperative “which is under an obligation to pay patronage dividends (as defined in section 1388(a)) in an amount equal to at least 50 percent of its net earnings from business done with or for its patrons, or which paid patronage dividends in such an amount out of the net earnings from business done with or for patrons during the most recent taxable year for which it had such earnings.”
We have typically not used this automatic extension with cooperative clients due to the uncertainty of actually paying patronage dividends by the time the initial due date approaches and also since some states do not recognize this due date and impose their own extension requirements if a federal extension is not filed. In almost all cases filing an extension is easier than determining if the exception applies. But we are happy to work with you if you want to explore this option.
New Due Date for 2016 Form 1065
Cooperatives that file Form 1065, primarily small worker cooperatives, will have the initial due date moved up from 3.5 months to 2.5 months after year end. The extended due date stays the same as it has been at 8.5 months after year end.
As an example, for a calendar year cooperative, the initial due date will now be March 15th and the extended due date will still be September 15th. For Form 1065 filers, year ends other than December are generally prohibited.
There is a related document from the AICPA (American Institute of CPAs) that summarizes all of the due date changes in detail. There is also a due date chart for all corporation year ends with the original and extended due dates outlined.