On July 31, 2015, President Obama signed into law the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015. Included in this law is a requirement to change the tax return filing date of businesses operating as Partnerships and as “C” corporations beginning with the 2016 reporting year. Although this change is still 18 months away, we must begin to prepare for it now. This is an unprecedented change.
Essentially, the changes are:
Old Filing Date New Filing Date
Partnership Returns April 15 March 15
C Corporation Returns March 15 April 15
Partnerships generally use a calendar year end (December 31). Therefore the only change for those partnerships will be the due date of the tax return being March 15 rather than April 15.
However “C” corporations often use a year ending other than the calendar year. Therefore, the filing dates for “C” Corporation returns will be adjusted to a filing date that corresponds with the 15th day of the 4th month following the corporation’s year end instead of the 3rd month following the end of the corporate tax reporting year. The only exception to this rule will be for “C” corporations with a June 30 year end. For those corporations, the old filing date of September 15 will be retained through 2025.
This change will be in effect starting with the 2016 returns that will be filed in 2017. This is a permanent change and will continue on into the future. The intent of this change is to get the partnership’s Schedule K-1 to the partners by March 15 to allow them time to file their personal income tax return on time by April 15 and not have to get an extension. In the past, partners often received their K-1 so late in the filing season that it was impossible to get their return completed and filed by April 15. We will see if that plays out according to plan.
Many of you are involved in publicly traded partnerships as investors. It is thought that the acceleration of the partnership tax return filing date from April 15 to March 15 will encourage partnerships to get their tax return completed and provide you with your Schedule K-1 in time for you to timely file your tax return.
Please note that the filing due date of partnerships that operate as an LLP (limited liability partnership) or a LLC (limited liability company) will change from April 15 to March 15 as well.
Extensions will still be available if necessary.
It will be interesting to see what action will be taken by the individual states as to whether or not they will adjust their partnership and “C” corporation filing dates. This is going to be something we will need to watch closely.
I will be monitoring this situation and will update you as I receive any additional information. Please give me a call if you have any questions regarding this matter.