Due dates for certain United States federal income tax returns will shift, effective for tax years beginning after December 31, 2015, under legislation recently signed into law by President Obama.
For partnerships, tax returns will generally be due one month earlier than under current law. For C corporations, tax returns will generally be due one month later than under current law. For example, the return of a partnership reporting on the calendar year will be due on March 15, rather than April 15. The return of a calendar year C Corporation will be due on April 15, rather than March 15. The filing deadline for S corporations will generally remain the same: March 15 for calendar year taxpayers.
The applicable dates for returns filed on extension will generally remain the same. Accordingly, the extension period for partnerships will increase from five months to six months, generally retaining a September 15 deadline for calendar year taxpayers. Similarly, the extension period for C corporations will generally decrease from six months to five months, in order to retain a September 15 deadline for calendar year taxpayers.
Specifically for C corporations with a fiscal year ending on June 30, the new due date for tax returns will not take effect until 2026.
Supporters of the new rules criticized inefficiencies of the current timeline for tax return filing. Many individuals and C corporations rely on partnership tax return filings in order to calculate their own taxes. But under current rules, C corporations are required to file tax returns one month before similarly situated partnerships. Individuals are generally required to file on the same day that calendar year partnership tax returns are due. The new rules are expected to improve the accuracy of tax returns and reduce the need for extensions and amendments by generally requiring pass-through entities to file first.
Certain tax planning decisions will be subject to new deadlines as a result of the revised tax return schedule. For example, “subsequent year” dividends paid by a real estate investment trust (a “REIT”) are required to be declared no later than the time prescribed by law for the filing of its tax return (including the period of any applicable extension). A calendar year REIT that does not file on extension will now have until April 15, rather than March 15, to declare such dividends. Several provisions of the Internal Revenue Code of 1986, as amended, were changed for purposes of consistency with the new tax filing deadlines.
The new law also provides that the extended six-year statute of limitation applicable to substantial omission of income items may be invoked by the Internal Revenue Service (the “IRS”) in connection with an understatement of gross income attributable to an overstatement of unrecovered basis. The IRS had previously sought this authority through the promulgation of Treasury Regulations, but the United States Supreme Court rejected that approach in United States v. Home Concrete & Supply, LLC, et. al., 132 S.Ct. 1836 (2012).