Years & years
IT sounds like a federally mandated traffic jam. The Tax Reform Act of 1986 is requiring small businesses to shift to a calendar fiscal year. Hitherto they have been allowed to use their own business judgment as to when their fiscal year should wind up, with tax forms due to the Internal Revenue Service 75 days after. Usually that has meant not closing the books New Year's Eve, but rather some time in summer or fall. The new law will send owners of small businesses scurrying in right after the first of the year to see their overworked accountants and tax preparers - just as millions of individuals are scurrying to the same people for help on their own personal 1040 forms.
Legislation is working its way through the Senate Finance and House Ways and Means Committees that would let partnerships, S corporations, and personal service corporations retain their current fiscal years; new businesses, or businesses wanting to change from a calendar year, would be allowed to close their books Sept. 30, Oct. 31, or Nov. 30, as well as Dec. 31.
The bipartisan supporters of the bill hope to see it included in the package of technical corrections to the tax law expected out of committee soon. It would make life easier for business owners, for tax professionals, and not least for the IRS, which otherwise will be hard pressed to find all the accountants it needs for audits and the like during the first-of-the-year tax rush.