Tax News

Tax News

News story posted in General on 31 August 2015| comments
audience: National Publication | last updated: 31 August 2015
Print
||
Rate:

Tax Filing Deadlines Take Major Shifts Under New Surface Transportation Law

President Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, P.L. 114-41, on July 31. Although this new law’s primary role is to provide a stop-gap extension of Highway Act funds throughOctober 29, 2015, it also raises revenues for that extension through a variety of tax compliance measures. Among those tax measures are changes in the filing due dates of certain tax and information returns. The changes in these due dates are projected to raise $314 million in revenue over the next 10 years and also accomplish, at least in part, a long sought-after goal of many tax practitioners: to better align return deadlines with the deadlines for information returns, as well as with the workflow of return preparers during the extended filing season.

In light of the major changes being made to some return deadlines, the new law gives most taxpayers and return preparers over a year and a half to adjust. Generally, no change takes place before the 2017 filing season (for 2016 tax-year returns). Taxpayers with a short tax year beginning after December 31, 2015, are also impacted. The effective dates of various provisions of the new law are discussed at the end of this article.

Return Due Dates

The due dates for various income tax returns have been codified and modified by the new law.

Partnerships and S corporations. Specifically, the due date for Form 1065, U.S. Return of Partnership Income, will be the 15th day of the third month following the close of the partnership’s tax year (Code Sec. 6072(b), as amended by the 2015 Surface Transportation Act). The change will be applicable to returns for tax years beginning after December 31, 2015. Previously, partnership returns were due the 15th day of the fourth month (April 15 for calendar-year taxpayers). The new law also codifies the existing 15th-day-of-the-third-month due date for Form 1120S, U.S. Income Tax Return for an S Corporation, so that both Form 1065 and Form 1120-S will have the same due date (March 15 for calendar-year entities).

Comment

The change in the due date for partnership returns to March 15 will enable partners who are individuals to receive their Schedule K-1, Partner’s Share of Income, Deductions, Credits, etc., in time to report the information on their Form 1040, U.S. Individual Income Tax Return (like individuals who are S corporation shareholders). Without this change, many individuals who are partners are forced to file a six-month extension to complete their Form 1040.

C corporations. Generally applicable to returns for tax years beginning after December 31, 2015, the due date for Form 1120, U.S. Corporation Income Tax Return, is changed to the 15th day of the fourth month following the close of the tax year (April 15 for calendar-year taxpayers) (Code Sec. 6072, as amended by the 2015 Surface Transportation Act). The current deadline through the 2015 tax year is set at the 15th day of the third month following the close of the tax year (therefore, March 15 for calendar-year corporations through the 2016 filing season for 2015 returns).

However, a special rule provides that for C corporations with fiscal years ending on June 30 the changes do not begin to apply until returns for tax years beginning after December 31, 2025 (Act Sec. 2006(a)(3)(B) of the 2015 Surface Transportation Act). Therefore, June 30 fiscal-year corporations retain a filing deadline of September 15th until returns for tax years starting in 2026.

Related C corporation deadlines. The change in the due date of a C corporation’s return affects other Code provisions keyed to that due date, including:

S corporation underpayments. In the case of the penalty for underpayment of estimated taxes, the change does not affect the period of underpayment of an S corporation, since that due date was merely codified by the new law and remains the same as the existing deadline (15th day of the third month, or March 15 for calendar-year corporations) (Code Sec. 6655(g)(4)(E)).

Filing Extension Periods

In addition to modifying some initial filing deadlines, the new law changes the deadlines on certain filing extensions:

C corporations. The six-month automatic extension currently provided by Reg. §1.6081-3(a) to C corporations filing Form 1120 is codified (Code Sec. 6081(b), as amended by the 2015 Surface Transportation Act).

Comment

Currently, Code Sec. 6081(b) provides an automatic three-month extension, but Reg. §1.6081-3(a) essentially extends it to six-months if Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns, is filed and other requirements are met, so this portion of the new law codifies existing practice.

The new law contains an important twist that impacts calendar-year corporations. A special rule provides that in the case of any calendar-year C corporation beginning before January 1, 2026, the maximum extension allowed is five months, not six months. Further, in the case of a C corporation with a fiscal year ending on June 30 and beginning beforeJanuary 1, 2026, the maximum extension allowed is seven months (Code Sec. 6081(b), as amended by the 2015 Surface Transportation Act).

Comment

Since many C corporations require extensions to file before all necessary information can be gathered for the tax year, the current six-month extension which, for calendar-year corporations, ends on September 15, will match up with the new five-month extension (for tax years 2016-2025), which will end on September 15 as the result of the change in the initial deadline for C corporations, from March 15 to April 15. The delayed switch again to a six-month extension toOctober 15 after 2025, also seems to be in keeping with having tax revenues come by the earlier September 15 date during the new law’s 10-year scoring window (2015-2025).

Many other extensions revised. The new law also directs the IRS to modify the relevant regulations regarding automatic filing extensions (using Form 7004 or another extension form) and due dates for tax years beginning after December 31, 2015, to provide the following:

  • a maximum six-month extension (currently five months) for partnerships filing Form 1065 (ending onSeptember 15 for calendar-year taxpayers);

  • a maximum five-and-a-half-month extension (currently five months) for trusts filing Form 1041 (ending onSeptember 30 for calendar-year taxpayers);

  • a maximum three-and-a-half-month extension (same as before) for employee benefit plans filing Form 5500 (series) (ending on November 15 for calendar-year taxpayers);

  • a maximum six-month extension (currently three months) for tax-exempt organizations filing Form 990 (series) (ending on November 15 for calendar-year taxpayers);

  • a maximum six-month extension (currently three months) for tax-exempt organizations filing Form 4720 (beginning on the original due date for filing the return);

  • a maximum six-month extension (currently three months) for split-interest trusts filing Form 5227 (beginning on the original due date for filing the return);

  • a maximum six-month extension (currently three months) for coal-mine operators filing Form 6069 (beginning on the original due date for filing the return);

  • a maximum six-month extension (currently three months) for charitable organizations or remainder trusts filing Form 8870 (beginning on the original due date for filing the return);

  • a due date equal of the 15th day of the third month after the close of a trust’s tax year for trusts filing Form 3520-A (with a maximum six-month extension (same as before)); and

  • a due date of April 15 for calendar-year filers of Form 3520, with a maximum extension of six months (ending on October 15).

Add comment

Login to post comments

Comments

Group details

  • You must login in order to post into this group.

Follow

RSS

This group offers an RSS feed.
 
7520 Rates:  Aug 1.2% Jul 1.2.% Jun 1.2.%

Already a member?

Learn, Share, Gain Insight, Connect, Advance

Join Today For Free!

Join the PGDC community and…

  • Learn through thousands of pages of content, newsletters and forums
  • Share by commenting on and rating content, answering questions in the forums, and writing
  • Gain insight into other disciplines in the field
  • Connect – Interact – Grow
  • Opt-in to Include your profile in our searchable national directory. By default, your identity is protected

…Market yourself to a growing industry