Extensions and Due Dates Changing for Business Filings in 2016

Recently, the Senate passed legislation that funded a highway bill, but also changed several filing due dates for various businesses. The bill overrode the current due dates for several types of tax returns as well. So how do these changes affect your business and its filing dates? Consult with your tax professional, such as MVW Services in Artesia, CA, to determine your new filing date and what information you need to gather to avoid any potential penalties or interest fees.

The Background Behind the Change

While there are a variety of reasons offered for the changes in the new law, the observations of many in the industry seem to indicate that these changes are meant to get the K-1 filings to the individuals, partnerships and corporations earlier, thus resulting in more accurate return for all the concerned parties.

The parties that are most likely to see the benefits in terms of the changes to the due dates and the extensions will be those partnerships and corporations that have not chosen to follow the calendar year. The reason is that those following the calendar year will continue to have an extension due date in September.

How Did You Create Your Business?

How you and your partners originally set up your business will now have a bearing on the due date for filing your return. Additionally, your due date may also be effected based on how you choose to define the fiscal year for your business, either on a calendar or other annual determination basis.  Here are the new due dates based on the various options available for setting up a new business.

Partnership – For calendar year partnerships, the new due date is March 15^th. However, if you set up your business on a fiscal year basis, then you will need to file your return on the 15^th day of the third month following the close of your traditional fiscal year. However, you may apply for a maximum extension of six months to file your Form 1065, U.S. Return of Partnership Income.

C Corporations – The new due date is the 15^th day of the fourth month following the close of the corporation’s fiscal year, versus the previous due date of the 15^th day of the third month. If a corporation does follow the calendar year, then their due date will be April 15^th. Hence, this has given these corporations an additional month to file their return. While corporations do receive a six-month extension option, depending on when their fiscal year ends can affect their extension. For instance, a corporation that end on the calendar year can only receive a five-month extension until 2026, while a corporation that has a June 30^th end date for their fiscal year will be able to get a seven-month extension through 2026.

The Adjustment of Various Extensions

The extensions for corporations have been adjusted, with the long term goal of having all the extensions at an automatic six-months after 2025. Yet there were other extensions that received extensions. One of these is for trusts, which can apply for a five and half month extension, which will end on September 30^th for trusts that follow the calendar year.

For employee benefit plans filing the Form 5500 there is an automatic three and half month extension period that ends on November 15^th, again for those who follow a calendar year. Other forms have received extensions as well, in an effort to make the process more uniform over time. There are a variety of other extensions that have been changed, so you will want to consult with your accountant or tax professional to determine if any of these apply to your circumstances.

While these new dates do not apply to 2015 returns, depending on when your fiscal year ends, you may end up having to follow these new guidelines for your 2016 filing during the year of 2016. Therefore, it is important to work with your tax professional or accountant to determine what your new due date will be and if you are filing for an extension. As always, it is important to work closely with your tax professional to be sure that the information is reaching them in a timely manner to be sure that your return is filed accurately.

Click on the link below to contact one of the tax professionals at the office of MVW Services in Artesia, CA, to determine when your business returns are due and if you have any changes to your extensions.