The deadline has gone and the office is quiet, which makes this the week most firms treat as recovery.
Two things are worth doing before it closes. There is unfinished work that is still getting more expensive by the month, and there is a decision about next year that can only sensibly be taken right now.
The returns that missed are still on a clock
A return that did not go on 15 October is not simply late in a general sense. It is accruing at a specific rate.
The failure-to-file penalty is 5% of the tax due for each month or part month the return is late, capped at 25%. The words that matter are “part month”. A return filed on 2 November has crossed into a second month and carries 10%, where the same return filed on 30 October carries 5%.
So the cheapest week to file a late return is always this one. That is not urgency for its own sake; it is a calendar boundary with a price attached.
As before, both penalties are a percentage of tax due. A client sitting in a refund position is not accruing anything, and the returns worth chasing this week are the ones where a balance is owed. We set out that sorting in the deadline after the deadline.
There is a second line in December
This is the part that surprises firms, because it is not a date anyone puts in a calendar.
A return filed more than 60 days after its due date — and for these purposes the due date is the extended one — picks up a minimum penalty. For returns required to be filed in 2026 that floor is the lesser of $525 or 100% of the tax required to be shown on the return.
For a calendar-year return that was extended to 15 October, sixty days lands in the middle of December.
That gives the late pile a real deadline of its own, roughly two months after the one everyone was watching. It is the last quiet date in the year, and almost nobody schedules against it.
The “whichever is less” still applies, so a return with no tax owed has a floor of nothing. The clients who need to clear that December line are the ones who owe.
Two loose ends from the fifteenth
The FBARs. FinCEN Form 114 had its own automatic extension to 15 October and no routine extension beyond it. Any that did not go are now filed late, with a reason stated on the form itself. Worth confirming which of your foreign-account clients actually filed, separately from whether their return did, because the two move independently and are easy to conflate.
The December clients. If you sent letters requesting the additional two months for clients abroad, those returns are live work rather than finished work, and you will not receive any confirmation that the request was granted. Put them somewhere they will resurface in November rather than in the second week of December.
The only three weeks that are any use
Now the other thing, which matters more.
Every firm finishes an extension season intending to arrange next year differently. Almost none of them do, and the reason is not a lack of resolve. It is the calendar.
November goes to year-end planning conversations. December is short and half of it is holidays. January arrives with information returns, and by the time that clears, the season has started and nobody is redesigning anything until the following October, at which point the same conversation happens again.
The window where a firm can actually change how it handles capacity is about three weeks wide, and it starts the day after the deadline. It is open now.
It is also the only point in the year when the evidence is still fresh. Which returns hurt, which clients cost more than they paid, which files sat waiting on documents that never came — all of that is currently vivid and will be gone by January. That is the argument for writing it down now, and this week is when you read back what you wrote.
What changing something actually looks like
We are not going to pretend the answer is always an outside desk. Sometimes it is a fee change, or a harder line on document deadlines, or fewer clients.
If it is capacity, the honest version is smaller than most vendors suggest. It is a handful of returns, prepared and reviewed elsewhere, on your letterhead, while you decide whether the arrangement works. Not a season, not a commitment, not a platform migration in January.
We described what that first handover involves in what sending us five returns actually involves, and what a full season looks like once a firm has decided in a season with the desk. Neither is a decision that has to be made today. What has to happen this month is the part where you look at what October cost and decide whether to accept the same bill next year.
The honest ending
Most firms reading this will do nothing, and October 2027 will look exactly like October 2026. That is not a failure of character. It is what happens when the only evidence is a memory and the window to act on it closes before anyone has caught their breath.
The firms that do change something almost always start in the last week of October, with one honest conversation about which returns should not have been in the building at all.
Our desk prepares expat and domestic returns — Forms 2555, 1116, 8621, FinCEN Form 114 and Form 8938, alongside 1040, 1120-S and 1065 work. Every return is prepared by one IRS-licensed enrolled agent and reviewed by a second before it reaches your firm. Your letterhead, your client, your review — our hours. Preparing US returns since 2003 — 5,300+ tax returns filed in the last 4 seasons.