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Business Tax Due Date Changes Part of Highway Bill

Jul 31st 2015
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President Obama on July 31 signed into law a bill that will extend the Highway Trust Fund for the next three months. The Senate passed the short-term extension on Thursday, while the House voted to approve the legislation on Wednesday.

Included in the bill are provisions that change the deadlines of when certain tax returns must be filed. Most impacted by the due date changes are C corporations and partnerships.

“The new structure will provide more accurate information to taxpayers in a more logical flow and reduce the number of extended and amended individual and corporate tax returns that are filed each year,” Barry Melancon, CPA, CGMA, president and CEO of the American Institute of CPAs, said in a written statement on Friday.

According to a Tax Alert from McGladrey LLP, the new tax-related compliance provisions include:

Changes the tax-filing deadlines for calendar-year businesses. For tax years that begin after Dec. 31, 2015, returns of calendar-year C corporations will be due on April 15 (rather than March 15), and returns of calendar-year partnerships will be due on March 15 (instead of April 15). Calendar-year S corporation returns will continue to be due on March 15.

Changes the tax-filing deadline for fiscal-year businesses. The deadlines for fiscal-year filers are also changing. Returns for most C corporations will be due on the 15th day of the fourth month following the end of their fiscal year, and the returns for S corporations and partnerships will be due on the 15th day of the third month. This provision is generally effective for tax years beginning after Dec. 31, 2015.

“Interestingly, there is an exception for C corporations with a fiscal year ending on June 30,” Ed Decker, director of McGladrey Washington National Tax, wrote in the Tax Alert. “In those cases, the effective date of these changes is delayed until the first taxable year beginning after Dec. 31, 2025.

Adds disclosure for estates. Estates with a positive estate tax liability are now required to report the value of specific items of property – both to the IRS and to beneficiaries. This is intended to prevent beneficiaries from overstating basis upon a subsequent disposition of the property. The legislation includes penalty provisions for any such overstatements. These disclosure requirements are effective for estates filing Form 706, US Estate (and Generation-Skipping Transfer) Tax Return, after July 31, 2015.

Requires lenders to provide additional information on outstanding mortgages. In addition to reporting a borrower's name, address, taxpayer identification number, and interest paid, as currently required, lenders will also be required to start providing additional information to the IRS on Form 1098, Mortgage Interest Statement, beginning in 2017, including the loan origination date, the outstanding principal, and the property's address.

Modifies the rules regarding the statute of limitations with respect to understatements caused by overstatements of basis. The US Supreme Court recently ruled that substantial understatements of tax caused by an overstatement of basis are not subject to the six-year statute of limitations on assessments, but instead are subject to the normal three-year statute. This provision modifies the law to provide that such understatements are now subject to the longer statute. This provision is effective for returns filed after July 31, 2015, as well as for returns filed prior to enactment with respect to which the statute of limitations is otherwise still open, according to Decker.