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Our offices are closed tomorrow 1/7/25 from 8am – 1pm for a firm event. Thank you.
Summer hours are in effect: Our offices close at NOON on Fridays from May 17th to July 12th
Our offices are closed tomorrow 1/7/25 from 8am – 1pm for a firm event. Thank you.
In an effort to help employers subject to the Affordable Care Act’s (ACA’s) information reporting requirements meet those obligations, the IRS has extended two important deadlines. Employers now have an additional two months to provide employees Form 1095-B, “Health Coverage,” and Form 1095-C, “Employer-Provided Health Insurance Offer and Coverage.”
Employers have an additional three months to file the forms with the IRS. Reporting to the IRS is done by using Form 1094-C, “Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns,” and Form 1095-C, “Employer-Provided Health Insurance Offer and Coverage.”
The ACA enacted Section 6056 of the Internal Revenue Code (IRC), which requires all applicable large employers (ALEs) — generally those with at least 50 full-time employees or the equivalent — to report to the IRS information about what health care coverage, if any, they offered to full-time employees. Employers generally must report this information no later than February 28 — or March 31 if filed electronically — of the year following the calendar year to which the reporting relates.
Sec. 6056 also requires ALEs to furnish statements to employees that the employees can use to determine whether, for each month of the calendar year, they can claim a premium tax credit. The statements generally must be provided by January 31 of the calendar year following the calendar year to which the Sec. 6056 reporting relates.
Because of the deadline extension, however, for the 2015 calendar year, ALEs have until May 31, 2016, to file these information returns with the IRS (until June 30, 2016, if filing electronically). And they have until March 31, 2016, to furnish the employee statements.
Bear in mind that this reporting is required even if you don’t offer health insurance coverage. And employers with at least 50 but fewer than 100 full-time employees or the equivalent who are eligible for the transitional relief from the employer shared-responsibility provision for 2015 must still comply with the information reporting requirements.
Sec. 6055 of the IRC, also enacted by the ACA, requires health care insurers, including self-insured employers, to report to the IRS about the type and period of coverage provided and to furnish this information to covered employees in statements. The IRS’s extensions also apply to these deadlines: The 2015 calendar year information now must be reported by May 31, 2016, or, if filed electronically, June 30, 2016. Employee statements must be provided by March 31, 2016.
Every self-insured employer must report information about all employees, their spouses and dependents who enroll in coverage under the reporting requirements for insurers. This reporting is required even for self-insureds not subject to the ACA’s employer shared-responsibility provisions or the ALE reporting requirements. Self-insured ALEs must comply with the insurer requirements in addition to the Sec. 6056 requirements.
Further, non-ALE employers must comply with the Sec. 6056 requirements if they’re members of a controlled group or treated as one employer for purposes of determining ALE status. The employers that compose such a controlled-group ALE are referred to as “ALE members,” and the reporting requirements apply separately to each member.
Failure to comply with the information reporting requirements may subject you to the general reporting penalty provisions. Penalties for information returns and payee (employee) statements filed after December 31, 2015, are as follows:
Special rules apply to increase the per-statement and total penalties in the case of intentional disregard of the requirement to furnish a payee statement. Also, taxpayers with average annual gross receipts of no more than $5 million for the three preceding tax years are subject to lower maximum penalty amounts.
Even with the extensions provided by the IRS, now is the time for affected employers to begin assembling the necessary information for Forms 1094 and 1095. The compliance obligation will likely require a joint effort by the payroll, HR and benefits departments to collect the relevant data.
If you have questions about complying with the ACA’s information-reporting requirements, don’t hesitate to contact us. We’d be pleased to help.
With year end right around the corner, Congress passed the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act). The act extended numerous tax breaks that had expired December 31, 2014, and the President signed it into law December 18.
The new law is more significant than some tax “extenders” legislation in recent years because, in addition to extending relief, the PATH Act makes quite a few tax breaks permanent and also enhances some breaks. Let’s take a look at some of the breaks that may help you save tax on your individual and business returns in 2015 and beyond.
Sec. 179 of the Internal Revenue Code (IRC) allows businesses to elect to immediately deduct — or “expense” — the cost of certain tangible personal property acquired and placed in service during the tax year, instead of recovering the costs more slowly through depreciation deductions. However, the election can only offset net income; it can’t reduce it below zero dollars to create a net operating loss.
The election is also subject to annual dollar limits. For 2014, businesses could expense up to $500,000 in qualified new or used assets, subject to a dollar-for-dollar phaseout once the cost of all qualifying property placed in service during the tax year exceeded $2 million. Without the PATH Act, the expensing limit and the phaseout amounts for 2015 would have sunk to $25,000 and $200,000, respectively.
The new law makes the 2014 limits permanent, indexing them for inflation beginning in 2016. It also makes permanent the ability to apply Sec. 179 expensing to qualified real property, reviving the 2014 limit of $250,000 on such property for 2015 but raising it to the full Sec. 179 limit beginning in 2016. Qualified real property includes qualified leasehold-improvement, restaurant and retail-improvement property.
Finally, the new law permanently includes off-the-shelf computer software on the list of qualified property. And, beginning in 2016, it adds air conditioning and heating units to the list.
If your business is eligible for full Sec. 179 expensing, you might obtain a greater benefit from it than from bonus depreciation (discussed below) because the expensing provision can allow you to deduct 100% of an asset acquisition’s cost. Moreover, you can use Sec. 179 expensing for both new and used property.
The news is mixed on bonus depreciation, which allows businesses to recover the costs of depreciable property more quickly by claiming bonus first-year depreciation for qualified assets. It’s been extended, but only through 2019 and with declining benefits in the later years. For property placed in service during 2015, 2016 and 2017, the bonus depreciation percentage is 50%. It drops to 40% for 2018 and 30% for 2019.
The provision continues to allow businesses to claim unused AMT credits in lieu of bonus depreciation. Beginning in 2016, the amount of unused AMT credits that may be claimed increases.
Qualified assets include new tangible property with a recovery period of 20 years or less (such as office furniture and equipment), off-the-shelf computer software, water utility property and qualified leasehold-improvement property. Beginning in 2016, qualified improvement property doesn’t have to be leased to be eligible for bonus depreciation.
Note that, if you qualify for Sec. 179 expensing, it could provide a greater tax benefit than bonus depreciation. (See above.) But bonus depreciation could benefit more taxpayers than Sec. 179 expensing, because it isn’t subject to any asset purchase limit or net income requirement.
The PATH Act permanently extends the 15-year straight-line cost recovery period for qualified leasehold improvements (alterations in a building to suit the needs of a particular tenant), qualified restaurant property and qualified retail-improvement property. The provision exempts these expenditures from the normal 39-year depreciation period.
This is especially welcome news for restaurants and retailers, which typically remodel every five to seven years. If eligible, they may first apply Sec. 179 expensing and then enjoy this accelerated depreciation on qualified expenses in excess of the applicable Sec. 179 limit.
The research credit (commonly referred to as the “research and development” or “research and experimentation” credit) provides an incentive for businesses to increase their investments in research. But businesses have long complained that the annual threat of extinction to the credit deterred them from pursuing critical research into new products and technologies.
The PATH Act permanently extends the credit. Additionally, beginning in 2016, businesses with $50 million or less in gross receipts can claim the credit against alternative minimum tax (AMT) liability, and certain start-ups (in general, those with less than $5 million in gross receipts) that haven’t yet incurred any income tax liability can use the credit against their payroll tax.
While the credit is complicated to compute, the tax savings can prove significant.
The American Opportunity credit (a modified version of the Hope credit) allows eligible taxpayers to take an annual credit of up to $2,500 (vs. the Hope credit maximum of $1,800) for various tuition and related expenses for each of the first four years of postsecondary education (vs. the first two years with the Hope credit). The credit phases out based on modified adjusted gross income (MAGI) beginning at $80,000 for single filers and $160,000 for joint filers, indexed for inflation.
The American Opportunity credit was scheduled to revert to the Hope credit after 2017, with the $1,800 and first-two-years limits and lower MAGI phaseout thresholds. The PATH Act makes the more beneficial American Opportunity credit permanent.
The PATH Act extends through 2016 the above-the-line deduction for qualified tuition and related expenses for higher education. The deduction is capped at $4,000 for taxpayers whose adjusted gross income (AGI) doesn’t exceed $65,000 ($130,000 for joint filers) or, for those beyond those amounts, $2,000 for taxpayers whose AGI doesn’t exceed $80,000 ($160,000 for joint filers).
You can’t take the American Opportunity credit, its cousin the Lifetime Learning credit and the tuition deduction in the same year for the same student. If you’re eligible for all, the American Opportunity credit will typically be the most valuable in terms of tax savings. But in some situations, the AGI reduction from the deduction might prove more beneficial than taking the Lifetime Learning credit because the deduction ends up saving more tax than opting for the credit.
The PATH Act makes permanent the provision that allows taxpayers who are age 70½ or older to make direct contributions from their IRA to qualified charitable organizations up to $100,000 per tax year. The taxpayers can’t claim a charitable or other deduction on the contributions, but the amounts aren’t deemed taxable income and can be used to satisfy an IRA owner’s required minimum distribution.
To take advantage of the exclusion from income for IRA contributions to charities on your 2015 tax return, you’ll need to arrange a direct transfer by the IRA trustee to an eligible charity by December 31, 2015. Donor-advised funds and supporting organizations are not eligible recipients.
The law makes other tax benefits related to charitable giving permanent, too, including the enhanced deduction for contributions of real property for conservation purposes.
The itemized deduction for state and local sales taxes, instead of state and local income taxes, is now permanent. The deduction is especially valuable for individuals who live in states without income taxes. It can also benefit taxpayers in other states who purchase major items, such as a car or boat.
You don’t have to keep receipts and track all the sales tax you actually pay. Your deduction can be determined by using an IRS sales tax calculator that will base the deduction on your income and the sales tax rates in your locale plus the tax you actually pay on certain major purchases.
The PATH Act extends through 2016 the credit for purchases of residential energy property. Examples include new high-efficiency heating and air conditioning systems, insulation, energy-efficient exterior windows and doors, high-efficiency water heaters and stoves that burn biomass fuel.
The provision allows a credit of 10% of expenditures for qualified energy improvements, up to a lifetime limit of $500. If you’ve been thinking about investing in some energy upgrades, you’ll want to do it before the end of next year.
The PATH Act’s temporary and permanent extensions of numerous valuable tax breaks for individuals and businesses provide significant tax planning opportunities. We’ve only touched on some of the most popular here; the new law may include other extensions and enhancements that can benefit you. We can help you identify the ones that will minimize your taxes for 2015 and chart the best course in future years.
Taxpayers investing in Enterprise Zones (EZ) can earn an income tax credit for specific economic development activities. All businesses in the EZ must pre-certify in order to be eligible to take the Enterprise Zone credits. The pre-certification must be completed prior to the expenditure on which the credit is based.
The Colorado Economic Development Commission approved revised Enterprise Zone designations at their meeting on August 13, 2015. El Paso County is now part of a new zone called the Pikes Peak Enterprise Zone which also encompasses Teller County. Some areas have graduated out of EZ status while other have been newly added. These new designations are effective January 1, 2016.
You can search a map on the website as a preliminary step to determine if you are in an EZ. Click here for the map.
However, the map is based on Google Maps so is not always accurate. If you believe you are in an Enterprise Zone and that is not registering as true on the search, then contact your Enterprise Zone Administrator for confirmation.
We are happy to assist in this process if you would like, so please let us know if you would like us to search on your behalf. As our client, if we are already aware you are in an Enterprise Zone, we will apply for the pre-certification on your behalf.
Applicable Large Employers (ALEs) must file Form 1095-C for each full-time employee and provide a copy to the employee. Although there is a transition period for determining which employers qualify as ALEs, in terms of this tax form, any employer with at least 50 full-time or full-time equivalent employees during 2015 will be required to file the form. As January 31 falls on a Sunday in 2016, a copy of the form must be provided to each full-time employee by February 1, 2016. If paper filing, a copy of Form 1095-C for each employee must be filed with the IRS by February 28, 2016. If filing electronically, a copy must be filed by March 31, 2016. Copies filed with the IRS must be accompanied by transmittal Form 1094-C. An automatic 30-day extension for filing the forms with the IRS is available by submitting Form 8809.
Please note, small employers do NOT need to file Form 1095-C.
Health insurance providers, including employers with self-insured health plans must file Form 1095-B for each covered employee and provide a copy to the employee. It’s important to note that these forms must be completed without regard to the number of employees. As January 31 falls on a Sunday in 2016, a copy of the form must be provided to each covered employee by February 1, 2016. If paper filing, a copy of Form 1095-B for each covered employee must be filed with the IRS by February 28, 2016. If filing electronically, a copy must be filed with the IRS by March 31, 2016. Copies filed with the IRS must be accompanied by transmittal Form 1094-B. An automatic 30-day extension for filing the forms with the IRS is available by submitting Form 8809.
For additional information, please click here to see our article published June 1, 2015.
In the Accounting Services Department at Stockman Kast Ryan + Co, we take a balance sheet approach when closing a set of books. This means each account on the balance sheet (assets/liabilities and equity) is reconciled to source documents (bank statements, amortization schedules, payroll and sales tax returns, etc.) before closing the net income for the year. We view all the transactions during the year to capture any reclassifications that may need to be reallocated to a different account as well as reconciling expenses such as payroll.
There are many things to take into consideration when finalizing a Year End Closing.
Generally, we will make the final year-end adjustments to the balance sheet to zero out the owners’ distributions/draws for the upcoming year as well as to record depreciation. Occasionally, we have additional tax adjustments that may also affect your books.
We know that closing out your books for the year can be a daunting task. But taking the time to prepare now will likely save you both time and money later. “Clean” books make the tax preparation process that much easier and efficient. If you have questions regarding any of the suggestions listed here, please let us know.
On December 18, the Senate passed the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act), which the House had passed on December 17. Many popular tax breaks had expired December 31, 2014, so for them to be available for 2015, Congress had to pass legislation extending them. But the PATH Act does more than that.
Instead of extending breaks for just a year or two, which had been Congress’ modus operandi in recent years, the PATH Act makes many popular breaks permanent and extends others for several years. The PATH Act also enhances certain breaks and puts a moratorium on the Affordable Care Act’s controversial medical device excise tax.
It’s not all good news for taxpayers, however. For example, while the PATH Act does extend bonus depreciation through 2019, it gradually reduces its benefits. And it extends some breaks only through 2016.
Here is a quick rundown of some of the key breaks that have been extended or made permanent that may benefit you or your business.
Many of the PATH Act’s provisions provide an opportunity for taxpayers to enjoy significant tax savings on their 2015 income tax returns — but quick action (before January 1, 2016) may be needed to take advantage of some of them. If you have questions about what you need to do before year end to maximize your savings, please contact us.
As we approach year-end, one of the earliest business tax reporting tasks that must be completed is preparation of information returns known as Forms 1099. The purpose of Forms 1099 is for businesses to report to the IRS various items of income and deduction for a recipient. The IRS will match the information received on these forms to recipients’ tax returns, and if there is a discrepancy, the IRS will contact the taxpayer regarding the discrepancy.
Form 1099-MISC is the most common 1099 prepared by businesses. This Form reports payments made in the course of a trade or business to individuals and unincorporated businesses that do not constitute wages. The most common types of payments reported are royalty payments or payments to independent contractors for services or work. Below is a list of payments made by businesses that must be reported to recipients on Form 1099-MISC:
NOTE: The exemption from issuing Form 1099-MISC to a corporation does not apply to payments for legal services provided by corporations or for payments for medical or health care services provided by corporations.
Link to example Form 1099-MISC: www.irs.gov/pub/irs-pdf/f1099msc.pdf
Link to IRS instructions for preparation of Form 1099-MISC: www.irs.gov/pub/irs-pdf/i1099msc.pdf
Preparation of the actual Forms 1099-MISC is not difficult. But the determination of which vendors, service providers or other payees must receive a 1099-MISC, as well as gathering and summarizing all of the information that must be reported,can be time consuming.
In order to prepare Forms 1099-MISC, businesses must gather or summarize the following information for each 1099 recipient each year:
We recommend that businesses obtain the first two items of information each year on Form W-9 (http://www.irs.gov/pub/irs-pdf/fw9.pdf) for each recipient before the first payment of the year is issued to the recipient. The payment information can be automatically summarized in accounting software programs or can be summarized from detailed reports by payee.
Generally a copy of Form 1099-MISC must be furnished to a recipient by January 31st of the year following the reporting year. Accordingly, for 2015 reporting, Forms 1099-MISC should be mailed to recipients by February 1, 2016 because the due date falls on a Sunday. If, however, amounts are reported to 1099-MISC recipients in box 8 (Substitute payments in lieu of dividends or interest) or box 14 (Gross proceeds paid to an attorney), copies must be mailed to recipients by February 16, 2016.
Businesses that submit less than 250 of any one type of information returns can file paper Forms 1099. If a business files paper forms, specially prescribed forms must be used so that the paper forms submitted can be read by IRS optical character recognition (OCR) equipment. Most office supply stores sell the specially prescribed Forms 1099. (Do not attempt to download and print Form 1099 from the IRS website!) Failure to use the specially prescribed forms could subject the filer to a penalty of up to $100 per form.
Forms 1099 submitted on paper must be mailed to the IRS on or before February 29th of the year following the reporting year. Forms 1099 filers should submit copy A of Forms 1099 along with Form 1096 (Annual Summary and Transmittal of U.S. Information Returns) to the IRS at the address listed on Form 1096, based on the principal business location of the filer. Form 1096 is also a specially prescribed form and can also be purchased at office supply stores.
Businesses that must submit more than 250 of any type of information returns must file electronically using a system called FIRE (Filing Information Returns Electronically). The FIRE system is accessed via the Internet at https://fire.irs.gov/firev1r/default.aspx. Users must have software that can produce a file in the proper format according to IRS Publication 1220. Businesses required to submit Forms 1099 electronically generally must obtain IRS approval to do so by submitting Form 4419 – Application of Filing Information Returns Electronically at least 45 days before the due date of the returns. The due date for filing 2015 electronic Forms 1099 is March 31, 2016.
The Internal Revenue Code includes penalties that may apply to businesses required to file Forms 1099. The penalties are applied, unless due to reasonable cause, for:
Generally, the penalties imposed are from $30 per return to $250 per return, depending on the type of failure and how soon the errors are corrected. There is a de minimis exception for returns that failed to include required information or include incorrect information if there was timely filing of information returns and if all errors are corrected by August 1st of the year following the reporting year.
Stockman Kast Ryan + CO is here to help you with this year-end task. We can prepare Forms 1099-MISC for you or we can train you and/or your staff to not only prepare the 2015 Forms 1099-MISC but also assist with a jump start on the 2016 1099-MISC preparation process. We can assist with 1099 QuickBooks mapping and with implementation of procedures to gather and summarize all of the information required to file accurate 1099s as tax year 2016 progresses.
As the end of the year approaches, it is clear that tax planning will be no less complicated than in recent years. Several tax breaks that had expired were extended through the end of 2014, but there is no crystal ball for what Congress will do this year. Fortunately, although there are some year-end tax planning strategies that can’t be implemented until after tax legislation is signed into law, there are still many that can be implemented now.
Year-end tax planning for businesses often focuses on acquiring equipment, machinery, vehicles or other qualifying assets to take advantage of enhanced depreciation tax breaks. Unfortunately, the following breaks were among those that expired on December 31, 2014:
Enhanced Section 179 expensing election. Before 2015, Sec. 179 permitted businesses to immediately deduct, rather than depreciate, up to $500,000 in qualified new or used assets. The deduction was phased out, on a dollar-for-dollar basis, to the extent qualified asset purchases for the year exceeded $2 million. Because Congress failed to extend the enhanced election beyond 2014, these limits have dropped to only $25,000 and $200,000, respectively.
50% bonus depreciation. Also expiring at the end of 2014, this provision allowed businesses to claim an additional first-year depreciation deduction equal to 50% of qualified asset costs. Bonus depreciation generally was available for new (not used) tangible assets with a recovery period of 20 years or less, as well as for off-the-shelf software. Currently, it’s unavailable for 2015 (with limited exceptions).
Lawmakers may restore enhanced expensing and bonus depreciation retroactively to the beginning of 2015, but they probably won’t take any action until late in the year. In the meantime, how should you handle qualified asset purchases?
Keep in mind that, to take advantage of depreciation tax breaks on your 2015 tax return, you’ll need to place assets in service by the end of the year. Paying for them this year isn’t enough.
Other expired tax provisions to keep an eye on include the research credit, the Work Opportunity credit, Empowerment Zone incentives and a variety of energy-related tax breaks.
As always, consider traditional year-end planning strategies, such as deferring income to 2016 and accelerating deductible expenses into 2015. If your business uses the cash method of accounting, you may be able to defer income by delaying invoices until late in the year or accelerate deductions by paying certain expenses in advance.
If your business uses the accrual method of accounting, you may be able to defer the tax on certain advance payments you receive this year. You may also be able to deduct year-end bonuses accrued in 2015 even if they aren’t paid until 2016 (provided they’re paid within 2½ months after the end of the tax year).
But deferring income and accelerating deductions isn’t the best strategy in all circumstances. If you expect your business’s marginal tax rate to be higher next year, you may be better off accelerating income into 2015 and deferring deductions to 2016. This strategy will increase your 2015 tax bill, but it can reduce your overall tax liability for the two-year period.
Finally, consider switching your tax accounting method from accrual to cash or vice versa if your business is eligible and doing so will lower your tax bill.
Something else to think about on the tax front as we approach year end is the upcoming deadline for the Affordable Care Act’s information reporting provisions for applicable large employers (ALEs). ALEs — generally those with at least 50 full-time employees or the equivalent — must report to the IRS information about what health care coverage, if any, they offered to full-time employees.
The reporting deadline is February 28 (March 31, if filed electronically) of the year following the calendar year to which the reporting relates. Smaller employers that are self-insured or part of a “controlled group” ALE will also have reporting obligations.
With the deadline approaching, now is the time for affected employers to begin assembling the necessary information. The compliance obligation will likely require a joint effort by the payroll, HR and benefits departments to collect the relevant data.
The IRS has developed new forms for this type of information reporting: Form 1094-C, “Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns,” and Form 1095-C, “Employer-Provided Health Insurance Offer and Coverage.” (A non-ALE self-insured employer should file Forms 1094-B and 1095-B.)
Uncertainty over expired tax breaks has been an issue with year-end tax planning for the past few years. Nevertheless, most steps to reduce your 2015 tax bill must be taken before year end. We can guide you through the uncertainty by helping you to implement the strategies available today and to be in a position to act quickly when tax legislation is signed into law.
The choices can be complicated — and errors can be costly. Business legal structures are regulated by state governments, but your county or municipality also may have license requirements. What’s more, current tax laws make it difficult to change your legal structure after you begin operating. Making the right decision before you open for business is very important. How do you decide which legal structure is best for you and avoid potential problems? Consult with a certified public accountant (CPA). A CPA can help you make well-informed choices, explain how business structure affects your organization’s bottom line and file the necessary paperwork to start your business, if you’d like.
We have included the basic pros and cons of each structure in the chart below.
This is a complicated subject. To learn more about each structure and how to compare and determine which one is right for your business, read or download our Guide to Selecting Your Small Business Legal Structure or contact your SKR+Co tax advisor. We are happy to answer your questions and help you make the best choice for your specific situation.
On July 31, 2015, President Obama signed into law P.L. 114-41, the “Surface Transportation and Veterans Health Care Choice Improvemen
t Act of 2015.” This included many updated tax provisions, including revised due dates for partnership and C corporation returns as well as revised extended due dates for several tax returns. This article includes an overview of these new tax provisions.
Currently corporations (including S corporations) must file their returns by the 15th day of the third month after the end of their tax year. For corporations using a calendar year, the due date currently is March 15. Partnership tax returns have been due on the 15th day of the fourth month after the partnership’s tax year, or April 15 for calendar year partnerships.
Under the new law, effective generally for returns filed for tax years beginning after December 31, 2015, the new filing dates are:
These new filing dates generally will not go into effect until the 2016 returns have to be filed. There is also a special rule for certain C corporations with fiscal years ending on June 30 – the change will not apply until tax years beginning after December 31, 2025.
Effective for tax years beginning after December 31, 2015, the new law includes a longer extension period for a number of tax returns. To qualify, a taxpayer must have filed an application for an automatic extension by the original due date of the tax return.
Partnership returns (Form 1065) will have the same extended due date as under current law, or September 15. However, the new laws allows for a maximum extension of six months. Current law only allows for a five month extension.
Trust and estates filing Form 1041 will have a maximum extension of five and a half months under the new law. Under current law these returns can only extend for five months. The extended due date will be September 30 for calendar year taxpayers.
The Form 5500 series (Annual Return/Report of Employee Benefit Plan) will have a maximum extension of three and a half months. Under current law these returns can be extended for two and a half months. The extended due date will be November 15 for calendar year filers.
Taxpayers with a financial interest or signature authority over certain foreign financial accounts must file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Under current law, the due date is June 30 of the year immediately following the calendar year being reported, and there are no extensions allowed.
Under the new law, for returns for tax years beginning after December 31, 2015, the due date of FinCEN Report 114 will be April 15. However, taxpayers can receive an extension of up to six months. The extended due date will be October 15.
The AICPA and state CPA societies have been advocating for the new due dates included in P.L. 114-41 for several years. The idea is to create a more logical flow of information while allowing for taxpayers and tax professionals to file timely and accurate tax returns. While these due dates will not take effect for a couple of years, we feel it is important to relay this information to our clients as early as possible. Should you have any questions, please don’t hesitate to contact us.