President Obama signed an eleventh-hour extension of a highway-spending bill on July 31, 2015. Tucked away in the corners of this legislation are a few gems that will have an impact on business lawyers and CPAs across the country.
Historically, corporations have had an annual tax filing deadline on the 15th day of the third month following the close of their taxable year. Partnerships, by contrast, have had an annual filing deadline on the 15th day of the fourth month following the close of its taxable year. For most corporations and partnerships filing on the basis of a calendar year, that meant March 15th was tax day for corporations and April 15th was tax day for partnerships.
New filing dates
Under the new law, effective for tax years beginning after December 31, 2015, the filing deadline for both partnerships and S corporations will be moved up to the 15th day of the third month after the close of a taxable year. That means calendar-year partnerships and S corporations will have to file by March 15th. C corporations will generally have the filing deadline moved back to the 15th day of the fourth month after the close of the year, or April 15th for most calendar-year corporations.
There are a few exceptions, and it is still possible to obtain filing extensions. The new rules are intended to encourage partnerships and S corporations to send out their Forms K-1, reporting flow-through income and loss to owners, at least a month in advance of the traditional April 15th filing date for most individuals.
The tax-filing due dates are relevant in several other areas of the law, including payment dates and the commencement of statutes of limitations, so there will be some ripple effects from the new rules on issues other than the mere act of filing a return. Notably, Section 761(c) of the Internal Revenue Code states that an entity’s partnership agreement, for tax purposes, is the partnership agreement as amended no later than the due date for filing the return, without regard to extensions. This rule allows many partnerships to make final decisions about income allocations after the financial results for the year are in – the new legislation will require partnerships to make those decisions one month earlier.
Due dates for FBARSs
Congress also took this opportunity to accelerate the due date for Reports of Foreign Bank and Financial Accounts (FBARs), reporting a US person’s signature authority or ownership interest in a non-US financial account. The due date for an FBAR had been June 30th – the new law moves the due date up to April 15th, coordinating the FBAR filing date with the normal income tax filing date.
Notable omissions
One controversial proposal omitted from the new legislation would have permitted the US to revoke or deny a US passport to certain individuals who were in default in their taxpaying obligations. Congress also refused to revive the privatization of governmental tax collection, despite some political pressures to permit private companies to conduct these activities.
This article originally appeared in the August 2015 edition of the ACBA Business Section Newsletter. Read the full newsletter on the ACBA Business Law Section’s webpage.