The new Transportation Act signed into law by President Obama on July 31 was the object of much political wrangling. And more partisan bickering is likely on the horizon: the bill is essentially a three-month stopgap extension of the Highway Trust Fund.
What you may not be aware of is that the act includes a number of permanent key tax provisions, including revised due dates for tax returns of partnerships and C corporations. Here’s what you need to know.
Currently domestic corporations, including S corporations, file their returns by the 15th day of the third month after the end of their tax year. So corporations using a calendar year file by March 15 of the following year. Partnership returns are due the 15th day of the fourth month of the following year, or April 15 for those with a calendar year.
Because due dates for partnership and individual tax returns have been the same, individuals with partnership holdings often have to file for an extension because Schedule K-1 forms are not available in time.
Under new rules established by the Transportation Act, tax deadlines for both partnerships and S corporations will be the 15th day of the third month after the tax year, or March 15 for those with a calendar year. By having partnership returns due a month earlier, that should save some partnership holders from scrambling to file their individual returns.
Meanwhile, returns for C corporations are pushed back one month, to the 15th day of the fourth month after the tax year, or April 15 for those using the calendar year.
These changes are generally effective for returns for tax years beginning after 12/31/2015. For C corporations whose fiscal year ends June 30, a special rule will allow the change to be deferred for 10 years, i.e. the 2026 tax year.
Also beginning for 2016, the IRS is allowing for longer extensions to file certain forms under the new law. These include:
- U.S. Return of Partnership Income (Form 1065): Extension maximum is increased from 5 months to 6.
- Annual Return/Report of Employee Benefit Plan (Form 5500 series): Maximum extension is increased from 2½ months to 3½ months.
- U.S. Income Tax Return for Estates and Trusts (Form 1041): Extension maximum increased from 5 to 5½ months.
Additionally, FinCEN Form 114 is used to report a financial interest in or signatory over a foreign financial account. The Form 114 currently must be received by the Department of Treasury on or before June 30th of the year immediately following the calendar year being reported. Under the new law, for returns for tax years beginning after 12/31/2015, the due date of the FinCEN Form 114 will be April 15 with a maximum six-month extension ending on October 15.
If you want an analysis of how these revised tax deadlines will affect you, please call Liz Belcher in our Tax Services department at (317) 613-7846 or email [email protected].