Dividends received by December 31, 2012, may be the last dividends in decades to be taxed at a rate as low as 15 percent. Therefore, common corporate practice of mailing dividends on December 31, 2012, or even in the first week of January 2013, may have the effect of unnecessarily forcing shareholders to pay tax that could have been avoided by mailing a week or so earlier. The downside to the corporation of accelerating the dividend mailing date, or even paying a special dividend, is minimal—principally affecting after-dividend profits, which is not the standard measure.

The income tax law puts all shareholders on the cash method for purposes of inclusion of dividends. Therefore, if a corporation establishes a record date and payment and mailing dates in December of 2012, but mails or otherwise transmits the dividends so close to year end that they have to be received the next year, the shareholders can confidently report them in the next year and the corporation confidently assumes that will be the case by not including those dividends in the Form 1099 supplied to shareholders for 2012.

For decades, this has been a uniformly beneficial system, resulting in the delaying of dividend tax liability—perhaps not so this year if individual tax rates on dividends increase for 2013, which may not be known until the end of 2013.

Many major American corporations are sitting on piles of cash, with no clear plans to utilize the cash. What better time to pay an extra dividend? Where the dividend is mailed in a live check, mailing should probably occur before Christmas. Where electronic transmission occurs, techniques that previously resulted in post-December 31receipt should be accelerated.