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House bill would realign estimated tax deadlines to calendar quarters

Calendar pages flipping large

June 15 was the deadline for certain taxpayers to make their second estimated tax payment for the current year.

That could change, though, if a recently introduced bill makes it into law.

Trueing up tax and real-life calendars: Even though they are called quarterly, the four estimated tax amounts follow a different IRS calendar instead of the one we have on our electronic devices or hanging on our walls.

The tax agency wants the quarterly estimated payments on the 15thh of April, June, September, and the following January.

The Tax Deadline Simplification Act move two of those estimated tax deadlines. The bipartisan House proposal, sponsored by Reps. Debbie Lesko (R-Arizona) and Brad Schneider (D-Illinois), would realign them to the actual calendar segments, making estimated taxes due 15 days after the end of each calendar quarter.

The payments for individuals, businesses, estates, and trusts would then be on the 15th of April, July, October, and the next January.

Deadline shift should reduce confusion: "The IRS has set tax payment deadlines at uneven intervals, which can cause confusion for our nation's hardworking taxpayers," said Lesko in a statement announcing introduction of the bill.

She said the bill's common-sense change of estimated tax deadlines to a uniform schedule would make it easier for taxpayers to save appropriately and comply with due dates.

Schneider echoed that sentiment, saying "unnecessary complexity causes confusion and adds costs" to both individual and business taxpayers who must make estimated payments.

Why the odd dates: The not-quarterly quarterly payments used to follow the standard Gregorian calendar's three-month segments. But that changed because of, what else, money.

The Tax Adjustment Act of 1966, which became Public Law 89-368, moved the then-October estimated tax due date to September to pull third quarter estimated tax into the end of Uncle Sam's fiscal budget year, which runs from Oct. 1 to Sept. 30.

U.S. and tax historians note that most major tax bills are associated with wars. And historians, as well as those of us of a certain age, remember that back in the 1960s, the United States was looking for ways to pay for the Vietnam War.

While the 1966 law changed might have helped with the battle funding, the estimated tax collection shift left an extra month that had to be accounted for elsewhere in the payment schedule.

With Tax Day falling on April 15, lawmakers decided that moving the first estimated tax payment due date would complicate things. And since most taxpayers operate on a calendar year, the fourth quarter needed to continue to end on Dec. 31.

That left July as the only possibility. So, the second estimated tax quarter had its due date moved to June 15.

Tax community support: The quarterly tax payment deadline reversion to real calendar quarters has the support of major tax professional groups.

The American Institute for Certified Professional Accountants (AICPA) endorsed an earlier version of the bill. The National Association of Tax Professionals (NATP) also approves of the calendar date changes.

The tax preparer community sees first-hand how the current payment schedule can be confusing since it's not based on true quarters, wrote NATP Executive Director Scott Artman and Board President Jaimee Hammer in a letter to the bill's sponsors.

"This proposed legislation would match other tax collection systems, for example, payroll. The annualization of income would truly be representative of a 4-quarter basis," the NATP executives noted.

As noted, Congress has tried previously, and unsuccessfully, to change estimated tax calculation periods to calendar quarters. Maybe this latest effort will be the one that finally succeeds.

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