Summer Reading: Surface Transportation and Veterans Health Care Choice Improvement Act of 2015

Summer Reading; Not What It Used To Be

It was the first week in August and I thought I would sit under an umbrella on the beach to pass the time away with an entertaining book.  Then I got the news.

In the dead of summer, the blistering heat, the time when tax accountants can dream the day away, it happened.  The President signed into law the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015.  Wow!  What a title!  How could I pass this up?

It’s the entertaining book I was looking for:  a new FINCEN reporting deadline, and yes now we can extend the Form 114, tax filing deadline changes for partnerships and C Corporations, basis overstatement is now considered income omission to extend the statute of limitation from three years to six years.  I could hardly wait to dig in; and this is what I found.

  • Effective for tax returns filed for tax years beginning after 12/31/15, calendar year partnership income tax returns, Form 1065, are now due one month earlier on March 15. Fiscal year partnership returns are due on the 15th day of the third month.
  • C Corporation returns have been given an extra month to file, now the 15th day of the fourth month. Again, effective for years beginning after 12/31/15.  Just to add a little suspense, the powers that be thought it would be a good idea to have C Corporations with a June 30 year end wait 10 years until tax years beginning after 12/31/25 before they have to comply with the new deadline of the 15th day of the 4th
  • S Corporations stay the same with a due date of the 15th day of the third month. So they will be the same as partnerships.
  • Individual income tax returns, Form 1040, were left alone with their customary due date of April 15. There is something about the misery people go through every Spring that they didn’t have the heart to change this date.

As if tax season is not long enough the new law allows for a longer extension period if taxpayers cannot complete their returns on time.  This change will ensure tax preparers don’t spend too much time on the beach reading an entertaining book.  Some of the changes include:

  • The extension period for partnership returns is now six months, ending September 15th for calendar year partnerships.
  • A maximum extension of 5 ½ months for trusts and estates, ending on September 30th for calendar year entities.
  • Benefit plans now have 3 ½ months to extend Form 5500, now November 15th for calendar year filers.

For those people inclined to overstate the cost of basis of stock sold to reflect a smaller gain, beware that you may be giving the IRS more time to audit your return since they extended the statute of limitations to six years.  Ouch!   A valid assessment of additional tax by the IRS can generally be made no more than three years after the later of the date the return was filed or the due date of the return.  A six year limitation applies if a taxpayer omits from gross income any amount that is greater than 25% of the gross income originally reported.

The new law now includes in the definition of gross income the overstatement of the cost basis of property sold.  Be careful!

For taxpayers with foreign bank accounts with account balances in excess of $10,000 that are accustom to filing the FBAR report due every June 30th, please take note that the due date is now April 15th.  This is effective for tax years beginning after 12/31/15.  The FINCIN report on Form 114 is used to report the various foreign bank accounts.  For the first time ever, this form will be able to be extended six months until October 15th to meet the filing deadline.  And, any penalty for failure to file timely will now be eligible to get waived by the Treasury Department if certain requirements are met.

Other highlights you may be interested in reading include:

  • Consistent basis reporting for transfer tax and income tax purposes
  • New information reporting requirements for inherited property
  • Additional information will be disclosed on mortgage interest forms at year-end
  • Use of excess pension assets for future retiree health benefits extended

And there’s more!  This book came out just in time for anyone looking for some light reading on the beach this summer.  I hope you enjoy this as much as I did.

 Written by Tony Anchukaitis