New Tax Deadlines
The IRS has changed the due dates for filing a partnership tax return, Form 1065, from April 15th to March 15th. In addition, C-corporations, Form 1120, where changed from March 15th to April 15th. S-corporation due dates have remained the same with a due date of March 15th. Taxpayers with foreign bank accounts that meet the threshold will need to file FinCEN, Form 114 by April 15 with their individual income tax return, however there is an extension available.
In addition, there are new deadlines for filing W-2s, W-3s, and 1099-MISCs. They are now required to be submitted to the tax authorities on January 31st at the same time they are due to the employees/independent contractor recipients. If they are being efiled then they are extended till March 15th.
Congress returns for year-end tax legislation push
The end of year 2016 is expected to bring a rush of tax-related legislation in Congress. Lawmakers will be up against a December 31 deadline to renew some expiring tax incentives and possibly pass new tax breaks for individuals and businesses. The year may end with what is often called a “Christmas Tree bill,” a bill that includes a variety of tax and other provisions.
Tax breaks for individuals
In December 2015, many popular but temporary tax incentives for individuals were scheduled to expire at year-end. Congress renewed or made permanent most of these tax breaks in the Protecting Americans from Tax Hikes Act (PATH Act). However, some incentives were not included in the PATH Act and these are up for renewal, or possibly being made permanent, this December. They include the Code Sec. 25C residential energy credit (for energy-efficient improvements to homes) and the popular above-the-line deduction for higher education tuition and fees.
Tax breaks for businesses
The PATH Act also extended, and in some cases made permanent, many tax incentives for businesses. Some incentives, however, were not included in the PATH Act and are expected to come up for renewal this December. They include targeted incentives for film and television productions, Native American employment, the mining industry, railroads, and motorsports complexes. Along with these, some special tax breaks for alternative fuels are scheduled to expire at year-end.
Along with the incentives already described, some stand-alone tax bills are expected to come to votes in Congress before year-end. The bills, if passed, impact individuals, small businesses, farmers, and tax administration. They include:
· The Support Small Business R&D Bill, which would expand knowledge resources available to startups and small businesses in connection with their using the research and development (R&D) tax credit.
· The Restraining Excessive Seizure of Property through Exploitation of Civil Asset Forfeiture Tools (RESPECT) Bill, which would limit the IRS’s civil asset forfeiture authority (a companion bill has already passed the House).
· The Middle-Income Housing Tax Credit (MIHTC) Bill of 2016, which would provide tax credits to encourage development of affordable housing
· The Retirement Enhancement and Savings Bill of 2016, which expands tax incentives for small employers to create retirement savings plans and repeals the maximum age for contributions to traditional IRAs.
· The Louisiana Flood and Storm Victims Devastation Act, which provides emergency tax relief for persons affected by severe storms and flooding in Louisiana.
· The Farm Risk Abatement and Mitigation Election (FRAME) Act, which authorizes agricultural producers to establish and contribute to tax-exempt farm risk management accounts.
Any or all of these bills, and others, could be part of a year-end tax package. Our office will keep you posted of developments.
Natural disaster tax relief and preparedness
Following a natural disaster, the affect such a calamity would have on ones taxes is likely the last thing on an individual’s mind—if it crosses his or her mind at all. However, as inconsequential of a thought as it may seem as an individual is contending with the physical manifestations of what a natural disaster leaves in its wake, taxpayers should know that the IRS provides hardship related relief to those individuals so affected.
Disaster Area and Affected Taxpayer
Generally, for eligible taxpayers to take advantage of any relief offered by the IRS, the IRS must first denote whether a locale is a covered disaster area. A covered disaster area refers to an area of a federally declared disaster.
For taxpayers to take advantage of the natural disaster related tax relief that the IRS offers, individuals must be “affected taxpayers.” Those who qualify for relief include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a recognized deadline are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.
Under Code Sec. 7508A, the IRS is afforded authority to give affected taxpayers an extended date to file most tax returns. In addition, the IRS may postpone tax payments that have either an original or extended due date that falls on or after the start of the disaster, and on or before the date of the extension. Additionally, the IRS can postpone periods in which to make contributions to, and distributions from, a qualified retirement plan, as well as recharacterization and rollover elections. Other actions that the IRS can postpone include the filing of a petition with the Tax Court, filing a claim for credit or refund, as well as bringing suit on a claim for credit or refund.
The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record that is located in the designated disaster area. As such, taxpayers need not contact the IRS requesting relief. In some instances, the IRS will also waive late-deposit penalties for federal payroll and excise tax deposits. However, taxpayers who receive late filing or late payment penalty notices should call the number located on the notice to have the penalty abated.
The most significant assistance that the IRS can afford those taxpayers affected by natural disasters is through the casualty loss deduction. Affected taxpayers in federally declared disaster areas are given the option of claiming disaster-related casualty losses on their federal income tax return for the year in which the event occurred, or the prior year, but in any case, not in more than one tax year. On October 13, the IRS issued final and temporary regs, as well as a revenue procedure that extends the due date by which a taxpayer may make a Code Sec. 165 disaster loss election.
The temporary regs has extended the due date for making a disaster loss election to six months after the due date for filing the taxpayer’s federal income tax return for the disaster year, which is determined without regard to any filing extension. The IRS provided guidance, in the form of Rev. Proc. 2016-53, along with the regs that provide the procedures and requirements for how a taxpayer makes or revokes the election.
In efforts to encourage taxpayers to be proactive in planning for storms and other natural disasters, the IRS released guidance advising taxpayers as to steps they can take before disaster strikes. Employers who use payroll service providers are advised to ask the provider if it has a fiduciary bond. Such a bond protects the employer in the event of default by the payroll service provider in the wake of a natural disaster. In addition, the IRS advised that taxpayers should have an updated disaster plan. In addition, taxpayers should keep a duplicate set of key documents including bank statements, tax returns, identifications and insurance policies. Taxpayers are encouraged to photograph or videotape the contents of their home, as this makes it easier to quickly claim any available insurance and tax benefits after disaster strikes.
Additionally, the IRS makes every effort to ensure that taxpayers can access their previous-filed tax returns. Taxpayers can request copies of previously-filed tax returns and attachments, to include Form W-2, by filing Form 4506, Request for Copy of Tax Return. Taxpayers may also request transcripts showing most line items on these returns by ordering through the Get Transcript link on www.irs.gov
, by calling 1-800-908-9946
, or by using Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript or Form 4506-T, Request for Transcript of Tax Return.