Highway Funding Extension Changes Tax Return Due Dates & Other Tax Provisions
On July 31, the president signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, providing a three-month fix preventing a lapse in funding for the federal Highway Trust Fund. Congress modified several reporting requirements and tax provisions to help offset the costs resulting from the passage of this act.
Tax Return Due Dates
In general, business income tax returns fall into one of two buckets: corporations and partnerships. For many years, the IRS required corporations to file their tax returns by the 15th day of the third month after their year-end (March 15 for organizations with a calendar year-end) while partnerships were required to file by the 15th day of the fourth month after year-end (April 15 for calendar year-end taxpayers).
The new bill sets due dates based on a different standard. Business returns will be due based on whether taxation occurs at the business level (C corporations) or at the owner level (S corporations and partnerships). The law requires calendar year-end S corps and partnerships to file by March 15 (or 2½ months after the close of their tax year) and C corps to file by April 15 (or 3½ months after tax year close).
In addition, the law extends due dates for many different tax returns. All changes apply for tax years beginning after December 31, 2015. However, in the case of any C corp with a taxable year ending on June 30, the amendments made by this section apply to returns for taxable years beginning after December 31, 2025. The following table summarizes some of the key changes for entities with a December 31 year-end:
Mortgage Reporting Requirements
Several other tax reporting provisions also have been modified. Beginning in 2017, lenders must provide the IRS and borrowers with additional information regarding mortgages, including:
- Outstanding principal as of the beginning of the year
- Date of mortgage origination
- Address of the property securing the mortgage
Taxpayers should be aware that this could potentially delay receipt of Form 1098.
Basis Reporting by Estates
Taxable estates must report the value of property in the estate to the IRS upon the owner’s death. The reporting is due 30 days after the estate return due date. This ensures the person inheriting the property doesn’t overstate the basis if selling the property in the future, decreasing his or her tax liability. This basis reporting requirement applies to property with respect to which an estate tax return is filed after the date this act is enacted.
Statute of Limitations on Overstatement of Basis
Working around a 2012 Supreme Court decision, the new law clarifies that the IRS may assess additional tax for up to six years after the filing of a return if it finds a taxpayer distorted the property cost, leading to a lower tax liability upon sale. This provision is effective immediately.
In light of the new law, businesses and individuals should exercise caution to ensure timely and accurate filing of tax and informational returns. If you have questions or concerns regarding how the new law impacts you or your organization, contact your BKD advisor.