How to Handle Late Documents from Investment Companies This Year

Originally published in the Pacific Grove Hometown Bulletin

February 1, 2012

This year, the IRS put a new demand on investment firms to report the cost basis of stock sales that occurred in 2011.  Next year they will have to report similar information for mutual funds, and the following year for various other securities.  This demand will likely cause these firms to send you their normal tax documents late, or perhaps re-issue documents several times while they sort out this new process.  I have seen one large firm that stated they will not be issuing tax documents until the end of February.

The result of this will likely be a further compression of the already compressed time that tax professionals have to complete the returns for their clients.  If you want to ensure your return is completed by April 17 (the due date this year), you may wish to assume those documents will come late.  Gather everything else and provide to your tax professional early.  Include a note asking they prepare your returns except for the straggling investment company tax documents which you will provide later.  This gets your return in a great position to get it out the door as soon as the information arrives.

One further step may be to request they not file your returns until March 7th or so to lessen the chances that you will need to file an amendment because your investment company re-issued their tax document in late February.  If you are e-filing and sign electronic authorization forms, your tax professional is technically supposed to file the returns within three days of your dated signature.  That said, it would make more sense to sign your e-file authorizations later when you want the returns filed.

If you find yourself in the situation where you file the return and then receive a changed document – discuss it with your tax professional.  The larger the difference, the more likely you are to get a notice down the road.  If you owed more money as a result, you would be subject to interest and penalties at that point (which could be up to three years later and include interest and penalties for the whole time period).  You would need to balance that risk with the cost of amending.

Prior articles are republished on my website at

IRS Circular 230 Notice: To the extent this article concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.

Travis H. Long, CPA is located at 706-B Forest Avenue, PG, 93950 and focuses on trust, estate, individual, and business taxation. He can be reached at 831-333-1041.

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