Included in an unrelated bill for highway funding (gotta love politics), congress has granted the IRS new tax return due dates effective for 2016 calendar-year tax returns. The new due dates are as follows:
- Partnership returns will be due March 15th rather than April 15th.
- C-Corporation returns will be due April 15th rather than March 15th .
- S-Corporation returns and individual returns are unaffected.
- FBAR (Form 114) will be due April 15th rather June 30th, and they will now have a six-month extension available.
These changes are all positive and follow common sense - well done, IRS! The swapping of the Partnership and C-Corporation due dates will help more taxpayers be able to file on time without an extension, and the FBAR change means the due date now aligns with individual income tax returns.
Partners of partnerships must wait until they receive a K-1 statement from the Partnership before they file their tax return, and since the due date for both Partnership returns and Individual returns are both currently April 15th, this is often impossible. By moving the Partnership tax return (Form 1065) due date up to March 15th, partners should have an easier time receiving their K-1 statements on time and avoid having to file an extension. Of course, Partnership returns will now more often need to be extended, which makes an extension for the partner inevitable anyway, but such is life in the world of taxes.
C-Corp returns are "self-contained', as the corporation itself is the taxpayer and shareholders do not need to wait on the C-Corp to file in order to file their own tax return. Pushing the C-Corp (Form 1120) due date out to April 15th serves to give the business (and their CPA) more time to gather data and file an accurate tax return without an extension, to no one's detriment.
Finally, the change to the FBAR form is a very welcome change indeed. The FBAR is often thought of as part of the Individual tax return, but this is not correct - it is an informational form filed separately from your tax return and sent not to the IRS but to the US Treasury Financial Crimes Enforcement Network (FinCEN). This form scares everyone because the penalties are notoriously high and the filing requirement very low - $10,000 or more in a foreign bank account at any point during the year. Additionally, it has been an easy form to overlook because, as stated above, it is NOT included in your Individual tax return and it has had a weird due date of June 30th, when approximately no one is thinking about taxes.
As of 2016, the due date has been changed to April 15th to mirror Individual tax returns and - more importantly - a six-month extension will be available through October 15th. This is critical because foreign banking information can be extremely difficult to obtain and it allows taxpayers to file the FBAR at the same time as their tax return, even if the tax return is on extension.
Making a scary, confusing form a little less confusing is a step in the right direction; they're also making it a little less scary, but more steps should be taken to mitigate penalties for "everyday" taxpayers who happen to have foreign ties. That sounds like a topic for another day!
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