You may have heard about the Highway Trust Fund (the “Fund”) Extension that was passed this summer, officially part of the longer named “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015”. What you may not know is how many different ways this “extension” may affect you and your companies.
The extension was done to perpetuate the Fund, but only if the fund deficit could be offset by capturing revenues from other sources. It is in this way, that many of you may find yourselves sharing the road with the Highway Trust Fund.
The provision making the biggest headline splash was the changing of certain tax return due dates starting with calendar year 2016 tax filers(filing in 2017). The Act estimates that optimizing the filing dates of certain returns will facilitate more timely filings and less amended returns, offsetting costs by an estimated $398 million over 10 years. For example, the partnership tax return due date has been moved up one month to March 15th, allowing a better flow of tax reporting information between the entity and its owners. However their extended due date remains unchanged at September 15th. S corporations are unaffected by the Act, however calendar year C corporations have had their due date pushed back one month to April 15th with no immediate change to their extended due date until 2026. Trust returns are still due April 15th but extended dates will be pushed back 15 days to September 30th to allow receipt of K-1s from pass-through entities that file by their extended due date of September 15th.
For those of you required to report your foreign accounts on FinCen Form 114, Report of Foreign Bank and Financial Accounts (commonly known as “FBAR”), the due date of this filing was moved to April 15th (currently June 30th) to be in line with personal tax filing deadlines. While the earlier date may put pressure on some individuals, you will be happy to know that there will be a provision for a six month extension, where there had been none previously.
Another provision, estimated to recoup an estimated $1.8 billion over 10 years, is a modification to mortgage information reporting requirements starting with the 2016 calendar year. Lenders would now be required to report the property address, the origination date, and the mortgage balance. The aim in this provision is to reduce mortgage interest deductions taken due to error or fraud, essentially increasing tax revenues. The IRS will be better able to match mortgage interest between residences and rental properties as well as to quickly gauge if an individual is in excess of their allowable mortgage interest deduction.
This legislation has provided a unique juxtaposition of several long term impact items and the brief three month extension of the Fund until October 29th, 2015. When the Senate resumes in the fall, they will be looking for a long term funding legislation solution. Whether they are successful in this goal or end up having to pass the 35th short term extension of the fund since 2008, some sort of legislation act will be enacted. Don’t be surprised if in that legislation you see some additional tax provisions, including tax extenders, especially if it comes to fruition close to year end. Time will tell as we keep our eye on the “highway” ahead.
-Ray Neubauer, CPA, CGMA, Partner