Highway Bill Includes Provisions for Individual and Business Taxes
On July 31, 2015 President Barack Obama signed into law a bill for highway funding and veterans affairs that includes important tax provisions for individuals and businesses.
Some of the notable tax-related changes put into action by H.R. 3236, the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015,” are as follows:
Tax Implications for Businesses and Individuals
- Changes to Tax Return Filing Dates
- Partnerships: Due March 15, or 15th day of third month following close of fiscal year (if not calendar year). Previously due April 15 for calendar fiscal year.
- Effective for tax years beginning after Dec. 31, 2015.
- Maximum six-month extension.
- C Corporations: Due 15th day of fourth month following close of the corporation’s year. Previously due 15th day of third month following year end.
- Effective for tax years beginning after Dec. 31, 2015 (except for C Corps with tax year ending June 30, in which case it goes into effect in 10 years, for tax years beginning after Dec. 31, 2025).
- C Corporations will be eligible for a five or seven-month extension depending on end of corporate year.
- S Corporations: No change.
- Partnerships: Due March 15, or 15th day of third month following close of fiscal year (if not calendar year). Previously due April 15 for calendar fiscal year.
- Audit Statute of Limitation Increased to Six Years for Gross Income Omission
- H.R. 3236 includes changes to IRS code to clarify that an “overstatement of basis” (or over-claiming of a tax deduction) is considered an omission from gross income, thus subject to audit for six years after filing. Previously limited to three years.
- Effective for returns filed after July 31, 2015, and for returns filed before July 31, 2015 for which assessment period has not yet expired.
- H.R. 3236 includes changes to IRS code to clarify that an “overstatement of basis” (or over-claiming of a tax deduction) is considered an omission from gross income, thus subject to audit for six years after filing. Previously limited to three years.
- Foreign Income Report Filings
- Report of Foreign Bank and Financial Accounts (FBAR) Form 114
- Due April 15, six-month extension permitted. Previously due June 30.
- Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts Form 3520
- Due April 15 for calendar-year filers, maximum six-month extension.
- Annual Information Return of a Foreign Trust with a United States Owner Form 3520-A
- Due by the 15th day of the third month after the close of the trust’s year, maximum six-month extension.
- Report of Foreign Bank and Financial Accounts (FBAR) Form 114
- Basis Reporting for Estates and Beneficiaries
- The basis of property received by a decedent’s beneficiary may not exceed the basis of the property reported by the estate for tax purposes.
- Effective for estate returns filed after July 31, 2015.
- An executor of an estate required to file a tax return must provide information returns to the IRS and payee statements to any person who holds a legal or beneficial interest in the property.
- Effective for estate returns filed after July 31, 2015, due within 30 days of return due date or filing date.
- The basis of property received by a decedent’s beneficiary may not exceed the basis of the property reported by the estate for tax purposes.
We hope this information has been helpful to you. If you have questions about the tax implications of H.R. 3236, please contact your Whalen & Company representative.
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