By: Rebecca G. M. Krehbiel and Robert G. Tweel
Beginning with returns for tax year 2016, a new law will go into effect which revises the due dates for partnership and C corporation returns and changes the extended due dates for some returns. The new rules are summarized below.
Due Dates Prior to Change
Before this change, domestic corporations (including S corporations) had to file their returns by the 15th day of the third month after the end of their tax year. Thus, corporations using the calendar year had to file their returns by March 15 of the following year. The partnership return was due on the 15th day of the fourth month after the end of the partnership’s tax year. Thus, partnerships using a calendar year had to file their returns by April 15 of the following year. Since the due date of the partnership return is the same date as the due date for an individual tax return, individuals holding partnership interests often had to file for an extension to file their returns because their Schedule K-1s may not have arrived until the last minute.
Revised Due Dates for Partnership and C Corporation Returns
The new law restructured the entity return due dates, effective generally for returns for tax years beginning after December 31, 2015:
- Partnerships and S corporations will have to file their returns by the 15th day of the third month after the end of the tax year. Thus, entities using a calendar year will have to file by March 15 of the following year. In other words, the filing deadline for partnerships will be accelerated by one month; the filing deadline for S corporations stays the same. By having most partnership returns due one month before individual returns are due, taxpayers and practitioners will generally not have to extend, or scurry around at the last minute to file, the returns of individuals who are partners in partnerships.
- C corporations will have to file by the 15th day of the fourth month after the end of the tax year. Thus, C corporations using a calendar year will have to file by April 15 of the following year. In other words, the filing deadline for C corporations will be deferred for one month.
Because these changes apply to tax years beginning after December 31, 2015, these rules will go into effect for tax year 2016.
Under a special rule for C corporations with fiscal years ending on June 30, the change is deferred for ten years — it won’t apply until tax years beginning after December 31, 2025.
Revised Extended Due Dates for Various Returns
Taxpayers who can’t file a tax form on time can ask the IRS for an extension to file the form. Effective for tax returns for tax years beginning after December 31, 2015, the new law directs the IRS to modify its regulations to provide for a longer extension to file a number of forms, including the following:
- Form 1065 (U.S. Return of Partnership Income) will have a maximum extension of six-months (currently, a 5-month extension applies). The extension will end on September 15 for calendar year taxpayers.
- Form 1041 (U.S. Income Tax Return for Estates and Trusts) will have a maximum extension of five and a half months (currently, a 5-month extension applies). The extension will end on September 30 for calendar year taxpayers.
- The Form 5500 series (Annual Return/Report of Employee Benefit Plan) will have a maximum automatic extension of three and a half months (under currently law, a 2 1/2 month period applies). The extension will end on November 15 for calendar year filers.
FinCEN Report Due Date Revised
Taxpayers with a financial interest in or signature authority over certain foreign financial accounts must file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Currently, this form must be filed by June 30 of the year immediately following the calendar year being reported, and no extensions are allowed.
Under the new law, the revised due date of the FinCEN Report 114 matches the filing deadline for the Individual Income Tax Return Form 1040. Accordingly, for returns for tax years beginning after December 31, 2015, the due date of FinCEN Report 114 will be April 15 with a maximum extension for a 6-month period ending on October 15. The IRS may also waive the penalty for failure to timely request an extension for filing the Report, for any taxpayer required to file FinCEN Form 114 for the first time.
This article was written by Robert G. Tweel and Rebecca G. Morton. For questions regarding this, or other tax related issues, please contact a member of Jackson Kelly’s Tax Practice Group.