Important Tax Provisions in Highway Trust Fund Extension Law

On July 31, 2015, President Obama signed into law P.L. 114-41, the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (the “Act”).  Included in the Act are a number of important tax changes.  In this communication, we primarily address some changes in due dates provided by the Act.  These changes are for years beginning after December 31, 2015.  Thus, these changes generally will apply for the first time to 2016 calendar year returns, not 2015 calendar year returns.

Generally, the filing deadlines have been realigned to facilitate timely filing by taxpayers who report income from flow-through entities.

The filing deadline for partnerships will be the 15th day of the third month following the end of the tax year.  For calendar year partnerships this date is March 15, accelerated from April 15 currently.  The maximum extended due date for partnerships is six months.

The filing deadline for C Corporations will be the 15th day of the fourth month following the end of the tax year.  For calendar year C corporations this date is April 15, delayed from March 15 currently.  The extended due date for C corporations can vary, depending on tax yearends.

The extended due date for trusts will be September 30, rather than the current five month extension period ending September 15.

The returns for employee benefit plans filing Form 5500 will be eligible for an automatic 3 ½-month extension period ending November 15 for calendar year plans (currently a 2 ½-month period).

FinCEN Form 114, Report of Foreign Bank and Financial Accounts (commonly referred to as the “FBAR”), will have an original due date of April 15, with a maximum extension of 6 months.  Currently the due date is June 30, with no extensions.  Also, the IRS will be allowed to waive any penalty for late filing by a first time filer.

Other changes in due dates and extensions are provided in the Act.

The Act enacts a number of other changes in the following areas.

  • Consistent basis reporting for transfer tax and income tax purposes.
  • New information reporting requirements for inherited property.
  • Additional details required to be disclosed on mortgage information returns.
  • Basis overstatement now considered income omission for applying the extended six-year statute of limitation period.
  • Use of excess pension assets for future retiree health benefits extended.
  • Veterans with government health insurance will not count for determining “Applicable Large Employer” status under the Affordable Care Act.
  • Receipt of medical care by veterans for service-connected disabilities does not affect Health Savings Account eligibility.
  • Equalization of Highway Trust Fund Excise Tax on propane and liquefied natural gas.

If you have any questions about changes made by the Act, please contact your HM&M tax advisor.

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