President Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 ( P.L. 114-41) on July 31. The Act revises some return due dates, overrules the Supreme Court’s decision in Home Concrete, 2012-1 ustc ¶50,315, revises the employer shared responsibility requirements in the Affordable Care Act (ACA), and includes other tax compliance measures. Although the highway and transportation funding portion of the Act is temporary, the tax compliance measures are permanent.
The American Institute of Certified Public Accountants (AICPA) started the process to realign the return due dates some 10 years ago, Melissa Labant, CPA, director of tax advocacy, AICPA, told Wolters Kluwer.
“Workload compression has been a major issue for our members,” Labant explained. “The revisions are a very welcomed change. They set up a more logical flow of information, particularly for individuals who rely on information from pass-through entities.”
“The IRS needs to act quickly to provide guidance on some of the bill’s changes,” Dustin Stamper, director, Washington National Tax Office, Grant Thornton, LLP, told Wolters Kluwer. “Any estate tax return filed after July 31 must now comply with the new reporting requirements on asset values, so the IRS will either need to provide transition relief or quickly create reporting procedures.”
Return due dates
The Act provides that the due date for partnerships to file Form 1065, U.S. Return of Partnership Income and Schedule K-1s, Partner’s Share of Income, will move from April 15 to March 15 (or to the 2 1/2 months after the close of its tax year for fiscal-year taxpayers). Under the Act, the filing deadline for regular C corporations moves from March 15 (or the 15th day of the 3rd month after the end of its tax year) to April 15 (or the 15th day of the 4th month after the end of its tax year).
Compliance Note: For C corporations with tax years ending on June 30, the filing deadline will remain at September 15 until tax years beginning after December 31, 2025, when it will become October 15. An automatic six-month extension will be available for C corporations, except for calendar-year C corporations through 2025, during which an automatic five-month extension until September 15 will generally apply.
FBAR. The Act shifts the due date for the FBAR (Report of Foreign Bank and Financial Accounts, FinCEN Form 114) from June 30 to April 15 with a maximum extension of a six-month period ending October 15.
Exempt organizations. Under the Act, the maximum extension for the returns of exempt organizations filing Form 990 (series) is an automatic six-month period ending on November 15 for calendar year filers. The maximum extension for returns of exempt organizations required to file Form 4720 is an automatic six-month period beginning on the due date for filing the return (without regard to any extensions).
Comment: The automatic six-month extension for exempt organizations makes the filing process more efficient, Labant noted. Among other changes, the Act directs the IRS to modify its regs to allow a maximum extension of 3 1/2 months on Form 5500, Annual Return/Report of Employee Benefit Plan; and 5 1/2 months on Form 1041, U.S. Tax Return for Estates and Trusts.
Overstatement of basis
In Home Concrete, the Supreme Court ruled that an overstatement of basis does not result in an omission of income for statute of limitations purposes. Under the Act, the six-year limitations period applies where any overstatement of basis results in a substantial omission (25 percent or more) of income. The Act is effective for all returns for which the normal assessment period remained open as of the date of enactment and for returns filed after that date.
Comment: The issue had arisen in a number of cases, most notably in “Son of BOSS” ” tax shelter cases where the taxpayer overstates basis in a partnership interest, resulting in an understatement of income.
Affordable Care Act
The Act revises the ACA’s employer shared responsibility requirements ( “employer mandate”). Under the Act, an individual is not taken into account for purposes of the ACA’s employer shared responsibility requirements for applicable large employers (ALEs) if the individual has coverage under TRICARE or a VA health care program. This Act provides that this treatment may be applied retroactively, to months beginning after December 31, 2013.
Checklist: The ACA’s employer shared responsibility requirements only affect ALEs. Transition relief is available for 2015.
Mortgage servicers file Form 1098, Mortgage Interest Statement, to report certain information to the IRS. Included in the Act are additional reporting requirements for mortgage servicers, including the amount of the outstanding mortgage principal, the address (or description of property without an address) of the property, and loan origination date. The additional reporting requirements apply to returns and statements the due date for which (determined without regard to extensions) is after December 31, 2016.
The Act requires consistency between estate tax value and the “stepped-up basis” of assets acquired from a decedent. Executors of large estates will be required to disclose to the IRS information identifying the value of each interest received.
Pension funds. The Act extends through 2025 the ability of qualified employers to transfer excess pension assets to fund retiree health benefits and retiree life insurance.
Military veterans. Under the Act, a veteran’s eligibility to contribute to a health savings account (HSA) is not affected by receipt of medical care for a service-connected disability.
Fuel taxes. The Act uniformly imposes taxes on liquefied natural gas (LNG), liquefied petroleum gas (LPG), and compressed natural gas (CNG) on an energy-equivalent basis.
Highway funding. The highway and transportation funding portion of the Act, authorizing expenditure authority for the Highway Trust Fund, runs through October 29, 2015. The Act extends expenditure authority for the Leaking Underground Storage Tank Fund and the Sport Fish Restoration and Boating Trust Fund.