Recently Signed Highway Bill Includes Tax Updates
President Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 on July 31. The Act revises some important return due dates, overrules a Supreme Court tax decision, 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 (Congress must come up with another funding bill by late October), the tax compliance measures are permanent.
Return due dates
The Act changes the filing deadlines for a number of major tax forms. For the most part, however, these changes first apply to 2016 tax year returns that are due in 2017. Nothing will change for the return filing season coming up in early 2016.
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 ½ 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).
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.
A number of other filing extension deadlines will also change, starting in 2017.
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.
Overstatement of Basis
In the Home Concrete case, 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.
Affordable Care Act
The new 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.
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.