We expect to see many changes to the tax law in the foreseeable future. While no one knows all of the changes President Donald Trump and his Administration will make, we do know that a lot is being discussed.
While we wait for the new Administration to act, we want to make you aware of new business tax rules for 2017. First, there are several changes that became effective for tax years beginning after December 31, 2015 (i.e. for the 2016 tax year which returns are filed in 2017). This includes the following changes due to the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015:
- Revised filing dates for partnerships and S-corporations. Partnerships and S-corporation must file their returns by the 15th day of the third month after the end of the tax year. If your year-end is December 31, your returns are now due on March 15 instead of April 15.
- Revised filing dates for C-Corporations C-corporations must generally file their returns on the 15th day of the fourth month after the end of the tax year. If your year end is December 31, your returns are now due on April 15 instead of March 15. However, if your fiscal year end is June 30, the due date is still three months after year end. Corporations with short tax years ending anytime in June are treated as if the taxable year end is June 30.
- Revised Automatic Extensions The three-month automatic extension of corporate returns is generally changed to an automatic six-month extension. However, for returns with a December 31 year end and which the new tax year begins before January 1, 2026, the automatic extension period is five-months, not six. Additionally, returns with a June 30 tax year end and which begins before January 1, 2026, the automatic extension is seven-months instead of six.
Under the Protecting Americans from Tax Hikes (PATH) Act of 2015, a safe harbor for de minimis errors on information returns and payee statements was established. Effective for returns filed after December 31, 2016, if the error is $100 or less ($25 or less for tax withholding errors), the issuer of the information return is not required to file a corrected return, and no penalty will be imposed on the error. However, if a person requests that his or her pay statement is corrected and the issuer fails to do so, the safe harbor de minimis does not apply and the issuer could be subject to fines and penalties.
Under the Balanced Budget Deficit Control Act of 1985, as amended, corporations eligible for an additional first-year depreciation deduction can choose to accelerate the use of the prior year minimum tax credits. If this election is taken, the accelerated credits would be treated as refundable credits. Refund payments issued, as well as credit elect and refund offset transactions are subject to sequestration (automatic spending cuts to deal with the government’s budget deficit) in the amount of 6.9% in 2017 for refund payments processed on or after October 1, 2016 and on or before September 30, 2017. It also applies to credit elect or refund offset transactions processed on or after January 1, 2017 and on or before September 30, 2017.
We are happy to discuss this with you. Feel free to contact either Michael Sexton, CPA, CCIFP, Director – Tax Services (Michael.Sexton@MCC-CPAs.com) or me (Marty.McCarthy@MCC-CPAs.com) at 610-828-1900.
Disclaimer: This article is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).