Dramatic Changes in Tax Return Due Dates in Store for the 2016 Tax Year

Dramatic changes will occur to tax return due dates and extension timelines for 2016 tax returns to be filed in 2017.  The changes were enacted as part of the temporary highway funding bill enacted July 31, 2015.  The American Institute of Certified Public Accountants has been championing these changes to try and simplify and improve the flow of tax information from pass-through entities to individual taxpayers.  However, with Congress playing budgetary games with some of the due dates, these changes do not simplify the rules and will likely lead to confusion and penalties for missed due dates.  The following list is for the more common tax return types.  Other tax returns are also affected.  For purposes of the list below, a fiscal year means a taxable year other than a calendar year ending December 31^st.

Partnerships and Limited Liability Companies Treated as Tax Partnerships (Form 1065)

·       Current due date is 3 ½ months following the taxable year (April 15^th for a calendar year)

·       New due date is 2 ½ months following the taxable year (March 15^th  for a calendar year)

·       Current extension period is 5 months (September 15^th for a calendar year)

·       New extension period is 6 months (September 15^th for a calendar year)

C Corporations (Note Special Rules during a 10-Year Transition Period) (Form 1120)

·       Current due date is 2 ½ months following the taxable year (March 15^th for a calendar year)

·       New due date is 3 ½ months following the taxable year for all calendar and fiscal years other than June 30^th (April 15^th for a calendar year)

·       New due date remains 2 ½ months for C corporations with a June 30^th fiscal year until the first tax year beginning after 2025 at which time it changes to 3 ½ months.  Why did Congress do this?  To keep the tax payment due date at September 15^th for the next 10 years because the Federal budget year ends September 30^th and Congress did not want to defer tax collections to the next fiscal year.  A budgetary gimmick!

·       Current extension period is 6 months (September 15^th for a calendar year)

·       New extension period is 5 months for C corporations with a calendar year (September 15^th, again a budgetary gimmick!) until the first tax year beginning after 2025 at which time it changes to 6 months

·       New extension period is 6 months for C corporations with fiscal years other than June 30^th

·       New extension period is 7 months for C corporations having a June 30^th fiscal year (because the new original due date is temporarily 2 ½ months instead of the new normal 3 ½ months) until the first tax year beginning after 2025 at which time it changes to 6 months (because the new normal due date lengthens to 3 ½ months).

S Corporations (Form 1120S)

·       Current due date is 2 ½ months following the taxable year (March 15^th for a calendar year)

·       New due date:  No change

·       Current extension period is 6 months (September 15^th for a calendar year)

·       New extension period:  No change

Trust and Estate Income Tax Returns (Form 1041)

·       Current due date is 3 ½ months following the taxable year (April 15^th for a calendar year)

·       New due date:  No change

·       Current extension period is 5 months (September 15^th for a calendar year)

·       New extension period is 5 ½ months (September 30^th for a calendar year)

Charitable Remainder Trust Tax Returns (Form 5227)

·       Current due date is 3 ½ months following the taxable year (April 15^th for a calendar year)

·       New due date:  No change

·       Current automatic extension period is 3 months (July 15^th for a calendar year) with an additional 3 months upon IRS approval

·       New automatic extension period is 6 months (October 15^th for a calendar year)

Exempt Organization Tax Return (Form 990)

·       Current due date is 4 ½ months following the taxable year (May 15^th for a calendar year)

·       New due date:  No change

·       Current automatic extension period is 3 months (August 15^th for a calendar year) with an additional 3 months upon IRS approval

·       New automatic extension period is 6 months (November 15^th for a calendar year)

Employee Benefit Plans (Form 5500)

·       Current due date is 7 months following the taxable year (July 31^st for a calendar year)

·       New due date:  No change

·       Current automatic extension period is 2 ½ months if filing the separate extension Form 5558 (October 15^th for a calendar year) or else 1 ½ months if relying on the corporate income tax return extension Form 7004 (September 15^th for a calendar year)

·       New automatic extension period is 3 ½ months (November 15^th for a calendar year)  UPDATE:  THE NEW 3 1/2 MONTH PERIOD FOR FORM 5500 WAS REPEALED BY THE FIXING AMERICA'S SURFACE TRANSPORTATION (FAST) ACT ON DECEMBER 4, 2015.  THE 2 1/2 MONTH PERIOD IS RESTORED FOR TAX YEARS AFTER 2015.

Foreign Bank Account Report (FBAR, FinCEN 114)

·       Current due date is June 30^th each year (the FBAR is a mandatory calendar year)

·       New due date is April 15^th each year

·       Current automatic extension period:  None

·       New automatic extension period is 6 months (October 15^th)

Individual Income Tax Return (Form 1040)

·       Current due date is April 15^th each year (essentially all individuals use a calendar year)

·       New due date:  No change

·       Current extension period is 6 months (October 15^th)

·       New extension period:  No change

We will need to see how the states react to this slate of new due dates and extension periods!  Some states will follow the Federal rules, other states have their own specific rules.