Category Archives: News

Due-date Changes for Partnership and C Corporation Returns

This article was originally published in Hershey Advisors’ monthly Tax and Business Alert.

On July 31, 2015, the President signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (the Highway Act) into law, providing a three-month extension of the general expenditure authority for the Highway Trust Fund (HTF). Part of the HTF extension was paid for by changes to tax compliance provisions, the most significant of which is a change to the longstanding due date for C corporation [Form 1120 (“U.S. Corporation Income Tax Return”)] and partnership [Form 1065 (“U.S. Return of Partnership Income”)] returns.
For tax years beginning after 2015, the Highway Act switches the Form 1120 and Form 1065 initial due dates. Thus, beginning with 2016 returns:

  • The Form 1065 due date will be accelerated by a month to two and a half months after the close of the partnership’s tax year (March 15 for calendar-year partnerships). A six-month extension (through September 15 for calendar-year partnerships) will also be allowed.
  • The Form 1120 due date will generally be deferred by a month to three and a half months after the close of the corporation’s tax year (April 15 for calendar-year corporations). However, under a special transition rule, for C corporations with fiscal years ending on June 30, the change won’t apply (it will continue to be September 15) until tax years beginning after 2025. An automatic six-month extension will generally be allowed. However, until 2026, an automatic five-month extension (to September 15) applies to calendar-year corporations and an automatic seven-month extension (to April 15) applies to June 30 fiscal year corporations.

Note that the filing deadline for S corporations has not changed. So, for years beginning after 2015, S corporations and partnerships will have the same March 15 filing deadlines. Also, for calendar-year entities, the revised deadlines will first apply to 2016 returns filed in 2017.

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PA Education Improvement Tax Credit (EITC) Participation

Many of you may be wondering what is up with your EITC application and tax credits.

Unfortunately, the EITC program is a part of the state budget.  At this point, our governor and legislation have not been able to come to an agreement on the budget.  As such, participation in the program cannot be approved by DCED and the award letters are not being mailed.

At this point, it does not appear that the program is in jeopardy.  However, the legislation is talking about passing a partial budget so that social services and education services can be funded.  What is unknown is whether or not the EITC would be included in this partial budget or would be held out as a special project.

IMPORTANT – ALL PARTICIPANTS

  1. Do not make a contribution under the program until you have received the award letter from DCED.  Contributions made prior to the award letter may not be accepted by the state.
  2.  Contact us as soon as you have received your award letter.  Depending upon your fiscal year (see below), you could have only a day or two to make your contribution.

IMPORTANT – Business with fiscal years ending between 9/30/15 and 11/30/15.

If the budget does not pass before the end of your fiscal year, you will be ineligible to receive the tax credits.  Your tax planning assumed that these corporate or personal credits will be available.  This means you may be forced to pay significant personal or business taxes to the state immediately and may be subject to underpayment penalties and interest.

Assuming you are approved to participate in the program, you will be able to use your credits in the following tax year.  However, it will create a timing issue where you essentially will not be participating in the program during one tax year.

IMPORTANT – Business with fiscal years ending on 12/31/15

The budget impasse is not currently a significant issue for you.  In the event the budget crisis extends into December, it could become a problem in the future, but we don’t anticipate that this would occur.

If you have any questions on this matter, please contact us immediately!

Hershey Advisors PC