Compensation & Benefits Alert - November 2016

November 2016

Changes in Longstanding Tax Return Due Dates Impact Retirement Plan Contribution Dates

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Summary

Certain tax return and extension due dates will change for taxable years ending on or after December 31, 2016, based on provisions included in the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 that was signed into law on July 31st, 2015. The changes represent years of lobbying by The American Institute of CPAs to have a more logical flow of tax return due dates, especially to have pass-through entity returns and the resulting Form K-1s due before individual and corporate tax returns affected by the information.


Details

New Due Dates
The main change is that partnership tax returns are due a month earlier, while most C Corporation tax returns are due a month later.

CAUTION: Special Circumstance Apply to Certain C Corporation Returns with a June 30th year end.

Even though these changes will prove to be useful, there are a few oddities that confuse when a Form 1120 for C Corporations are due. In order to balance the bill’s impact on tax revenue over a ten year period, C Corporations have a number of due dates to keep track of depending on the year end of the corporation.

The table below highlights the new and existing original and extension due dates by form type.
 
Return Current Due Dates New Due Dates  Notes
Individual,
Form 1040
 April 15th  

 Extendable to  October 15th
 April 15th    
 

 Extendable to
 October 15th
No changes 
Partnership,
Form 1065
 April 15th

 Extendable to  September 15th
 March 15th

 Extendable to  September 15th
Fiscal year partnerships will have a due date the 15th day
of the 3rd month after year end with a six-month extension
S Corporation, Form 1120S  March 15th

 Extendable to  September 15th
 March 15th

 Extendable to  September 15th
No changes for S Corporation entities
C Corporation with a 12/31 Year End,
Form 1120 
 March 15th

 Extendable to  September 15th
 April 15th
 Thru 2025:

 Extendable to  September 15th
 2026 and  thereafter:  Extendable to  October 15th
The extension due date for calendar year-end C Corporations will
remain the same through 2025 and then change by a month in 2026
C Corporation with a 6/30 Year-End, Form 1120  September 15th

 Extendable to  March 15th
 Pre-2026:  September 15th

 Post-2026:  October 15th
 
C Corporations with 6/30 year ends will not have their original due date change until 2026
C Corporation with All Other Year-Ends,
Form 1120
 15th day of 3rd  month  after  year-end

 Extendable to  the 15th day of 9th month after year-end
 15th day of 4th  month  after year-  end

 Extendable to the  15th day of 10th   month  after year-  end
For C Corporations with year-ends other than 12/31 or 6/30
Trusts & Estates,
Form 1041
 April 15th

 Extendable to  September 15th
April 15th

Extendable to September 30th
Trusts and estate returns will have a 5 ½ month extension
Exempt Organizations, Form 990  May 15th
 Extendable to

August 15th
Second extension to November 15th
May 15th



Extendable to November 15th
Instead of two three-month extensions, Exempt Organizations will have one six-month extension


BDO Insights

No plan sponsor who relies on its extended tax return to determine the payment requirement will have an earlier deadline under these new rules. Partnerships that file the Form 1065 without extension will need to pay retirement plan contributions one month earlier than the current rules allow.
 
Background and Authority
Sponsors of qualified retirement plans rely heavily on a special rule that allows them to deduct contributions made next year on this year’s income tax return. The general deduction rule that requires accrual basis taxpayers to pay amounts within 2 1/5 months following the year end in order to deduct on the current year’s return, is trumped by IRC 404 that governs all deductions for contributions of an employer to an employees’ trust. Specifically, IRC section 404(a)(6) provides the following:

"Time when contributions deemed made. For purposes of paragraphs (1), (2) and (3), a taxpayer shall be deemed to have made a payment on the last day of the preceding taxable year if the payment is on account of such taxable year and is made not later than the time prescribed by law for filing the return for such taxable year (including extensions thereof)."

Therefore, the aforementioned changes to the tax return due dates affect the timing of the employer deductions.
 

For more information on your exposure the ERISA Title I penalties and the increased amounts, please contact: 
 
Joan Vines
Senior Director, National Tax 
Compensation & Benefits
Carl Toppin
Senior Manager, National Tax
Compensation & Benefits


Kim Flett
Managing Director, National Tax
Compensation & Benefits
Andy Gibson
Regional Managing Partner 
Tax Services


Alex Lifson
STS GES Principal 
Compensation & Benefits
Penny Wagnon 
Senior Director
Compensation and Benefits