At the end of July, Congress passed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015. This bill includes several provisions related to the Highway Trust Fund, road improvements, and health care for veterans. But, it also included changes to tax return due dates which will take effect for tax years beginning after December 31, 2015.
Background
Prior to the passage of this law, tax return due dates followed a schedule we have all been familiar with for many years. For calendar year taxpayers, the due dates were March 15 for corporations (C and S) and April 15 for partnerships, individuals, and trusts. Corporations, partnerships and trusts got an extension to September 15, and individuals to October 15. Also, calendar year benefit plans (Form 5500) were due July 31 with an extension to October 15, and annual reports of foreign bank accounts (Form 114) were due June 30 with no extension.
For years, the AICPA and other tax advocacy groups pushed to change the deadlines of corporations and partnerships. Corporations claimed March 15 was too soon to complete their return, especially large corporations that filed in several states. Individuals would also find themselves in a bind if they received a K-1 from a partnership at 5pm on April 15th, not giving them enough time to complete their 1040. The new dates are designed to alleviate some of these time constraints.
New due dates
For tax years beginning after December 31, 2015 (2016 tax year, filed in 2017), the new due dates are as follows: S-corporations and partnerships are due March 15, and C-corporations, individuals, and trusts are due April 15. Partnerships and S-corps, will get an extension to September 15, while C-corps and individuals get until October 15 on extension. Trusts on extension will get until September 30. Form 5500 will still be due July 31, but will get an extension until November 15. Finally, Form 114 will now be due on April 15 with an available 6 month extension to October 15.
Practical application
There are a few benefits to the new deadline structure. For large partnerships with several unrelated partners, potentially having a K-1 in March as opposed to April will allow individual taxpayers to file on time when they might not have been able to before. And, for large C-corporations, the added month to close out the year and finalize the tax return will reduce some of the pressure to complete the return, especially if there are many states involved. The true burden will be placed on the tax preparer, who will have to juggle the new deadlines for partnership and C-corporations.
Keep in mind there is nothing stopping partnerships and S-corps from requesting an automatic extension on March 15 and completing the returns under the same timeframe as in the past. By doing this, the time burden will ultimately stay with the individual to complete their return by the due date once their K-1 is received. The hope is that everyone will abide by the new deadlines as best as possible, and the Treasury can count on the majority of their tax revenue coming on April 15 of each year.