Highway bill scrambles business return due dates. A “short term highway funding bill” (HR 22) has switched some tax return filing due dates from what they have been pretty much forever. The bill, signed last week by the President, responds to complaints that K-1s are arriving too late by accelerating the partnership return due date and delaying C corporation due dates — with one bizarre exception.
The changes, which take effect for years beginning after December 31, 2015:
1065 (Partnership) returns: Currently due April 15, or 3 1/2 months after year-end, with a five-month extension. The new due date is March 15 (or 2 1/2 months after year-end), with a six-month extension.
1120 (C corporation) returns: Currently due March 15, or 2 1/2 months after year-end, with a six-month extension available. The new law makes the due date April 15 (or 3 1/2 months after year-end), with a six-month extension. Except, weirdly, for C corporations with a June 30 year-end, which retain the old deadlines through 2025.
FBAR (form 114) reports of foreign financial accounts. These have been due on June 30, with no extension available. They will be due on April 15, but with a six-month extension available.
1041 (estate and trust income tax) returns retain their April 15 due date, but their extension period is shortened from six months to 5 1/2 months.
It’s not entirely clear yet how this will work. I hope the FBARs will be considered automatically extended if the 1040 or other return is extended, to help avoid paperwork foot-faults.
The bill is an empty gesture to 1040 filers who get frustrated waiting on K-1s. They won’t get issued any faster. K-1s aren’t delayed because people are sitting around waiting for the due date. They are delayed because the tax law is hard, businesses can be complex, and it takes time to get the work done. On top of that, everybody is on a calendar year, thanks to Congress, so the professionals are trying to get all the returns completed at the same time.
All this means is that more partnership returns will be extended. It won’t get the K-1s out any sooner. The only way to change that is to simplify the tax law and to once again enable pass-throughs to have tax years ending on dates other than December 31.
Russ Fox, Deadline Changes for 2016 Tax Returns and 2016 FBAR. “It is unclear whether a separate extension for the FBAR will need to be filed. The reference to Treasury Regulation 1.6081-5 is for the automatic two-month extension of time to file for those residing outside the United States, so it appears those who do so reside will have a June 15th deadline for filing the FBAR (with a four-month extension available until October 15th).”
Paul Neiffer, Tax Return Due Date Changes and Other Items. “For estates required to file an estate tax return, they will now be required to report to the IRS basis information for all assets included in the estate.”
Kyle Pomerleau, Senate Approves Three-Month Highway Trust Fund Extension (Tax Policy Blog).
Congratulations to TaxGrrrl Kelly Phillips Erb. She has ditched tax practice to write on taxes full-time for Forbes.com. Well done!
William Perez, Every State’s Sales Tax Holiday for 2015
Jason Dinesen, New Nebraska Guidance on Same-Sex Marriage and Taxes
Matt McKinney, Do equal, 50/50 shareholders owe each other fiduciary duties? (IowaBiz.com)
Annette Nellen, Importance of lease terms for desired results. “If you want a particular tax result, be sure the lease agreement supports that result.”
Jana Luttenegger Weiler, NFL Decides to Give up Tax-Exempt Status (Davis Brown Tax Law Blog)
David Brunori, Michigan’s Wrongheaded Approach to Tax Policy. (Tax Analysts Blog):
Advocates of raising corporate taxes are assuming that people will want to stick it to corporate fat-cat shareholders. This is right out of the ‘‘tax the rich and give to the poor’’ playbook. Except in this case, proponents want to tax the rich and give it to construction contractors.
They want to tax the rich to give it to their friends — and that doesn’t mean the poor.
TaxProf, The IRS Scandal, Day 816
Peter Reilly, Judicial Watch Reveals That They Read Tax Blogs At IRS:
At the time Joe Kristan thought that the IRS was wrong to raise the issue and that Senators were right to call the Service to account about it. And this is the part of the document dump that I found most interesting. Paul Caron summarized Joe’s post and that was apparently printed out numerous times at the IRS as there are multiple copies in the document dump.
The IRS reads the Tax Update, so you should too!