Set up Your 2017 Calendar to Reflect New Filing Dates for 2016 US Tax Returns

On July 31, 2015, President Obama signed into law P.L. 114-41, the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015,” which includes a number of important tax provisions, including revised due dates for partnership, S corporations and C corporation returns and revised extended due dates for some returns.

Revised Due Dates for Partnership, S &C Corporation Returns 

Under the new law, there is a major restructuring of entity return due dates, effective generally for returns for tax years beginning after Dec. 31, 2015:

• Partnerships and S corporations will have to file their returns by the March 15th following the end of the tax year. This results in the filing deadline for partnerships being accelerated by one month with the filing deadline for S corporations staying as March 15. 
• By having most partnership returns due one month before individual returns are due, taxpayers and practitioners will generally not have to extend, or scurry around at the last minute to file, the returns of individuals who are partners in partnerships.
• C corporations will have to file by April 15th after the end of the tax year resulting in the filing deadline for C corporations being deferred for one month.

These changes to the filing deadlines generally go into effect for 2016 returns. Under a special rule for C corporations with fiscal years ending on June 30, the change is deferred for ten years and it won't apply until tax years beginning after Dec. 31, 2025. 
 

Revised Extended Due Dates for Various Returns

Taxpayers who can't file a tax form on time, can request an extension to file the requisite form. Effective for tax returns for tax years beginning after Dec. 31, 2015, the new law directs the IRS to modify its regulations to provide for a longer extension to file a number of forms, including the following:

 

• Form 1065 - U.S. Return of Partnership Income will have a maximum extension of 6 months. The extension will end on Sept. 15 for calendar year taxpayers.
• Form 1041 -U.S. Income Tax Return for Estates and Trusts will have a maximum extension of 5 1/2 months. The extension will end on Sept. 30 for calendar year taxpayers.
• The Form 5500 - Annual Return/Report of Employee Benefit Plan will have a maximum automatic extension of 3 1/2. The extension will end on Nov. 15 for calendar year filers.

FinCEN Report Due Date Revised

Taxpayers with a financial interest in or signature authority over certain foreign financial accounts must file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Currently, this form must be filed by June 30 of the year immediately following the calendar year being reported, and no extensions are allowed.

Under the new law, for returns for tax years beginning after Dec. 31, 2015, the due date of FinCEN Report 114 will be Apr. 15, with a maximum extension of 6 months ending on Oct. 15. The IRS may also waive the penalty for failure to timely request an extension for filing the Report, for any taxpayer required to file FinCEN Form 114 for the first time.

Form 3520 And Form 3520-A Due Date Revised

Form 3520-A is now due on March 15th and will have a maximum extension of 6 months until September 15th.

The IRS or FinCEN need to provide clarification on the format or forms for such extensions, which may be similar to Form 4868, which is the form for requesting extensions on Individual tax returns currently. There may also be a requirement that these extensions be filed on the BSA Website as in the case of the FBAR forms.

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Alert Your Clients to Possible Refund Delays in 2017

Tax professionals should alert their clients that a new law requires the IRS to hold refunds until mid-February 2017 for people claiming the Earned Income Tax Credit or the Additional Child Tax Credit.

In addition, new identity theft and refund fraud safeguards put in place by the IRS and the states may mean some tax returns and refunds face additional review.

 

 

 

 

 

Have a Tax Problem?

 

 

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or Toll Free at 888-8TaxAid (888 882-9243).
 

 

 

7th Circuit Court of Appeal Reduces Options For Appealing IRS Levies

According to Law360  -- Rejecting tax court precedent, the Seventh Circuit ruled Friday that delinquent taxpayers who weren't properly notified of Internal Revenue Service levies still have to pursue an administrative appeal before they can petition the tax court to invalidate the levy.

Acknowledging the difficulty it presents to taxpayers, the Seventh Circuit nevertheless found tax courts don’t have jurisdiction to rule on petitions to invalidate levies unless the taxpayer went to the IRS Office of Appeals first and received a notice of determination.

The case is Kerry Adolphson v. Commissioner of Internal Revenue, case number 15-2242 in the Seventh Circuit Court of Appeals.

Have a Tax Problem?

 

Don't Hide The Your Head In The Sand

 

 

 

Contact the Tax Lawyers at

Marini & Associates, P.A.

 

 for a FREE Tax Consultation Contact US at 

www.TaxAid.com or www.OVDPLaw.com

or Toll Free at 888-8TaxAid (888 882-9243).
 

 

 

Tax Authorities to Have Access to Beneficial Ownership Information By 2018!

The EU Council recently agreed on a proposal granting access for tax authorities to information held by authorities responsible for the prevention of money laundering. The directive will require EU member states to enable access to information on the beneficial ownership of companies. The effective date will apply from January 1, 2018.
 
On November 8, 2016, the Council agreed on a proposal granting access for tax authorities to information held by authorities responsible for the prevention of money laundering. The directive will require member states to enable access to information on the beneficial ownership of companies. Its effective date is January 1, 2018.

The proposal is one of a number of measures set out by the Commission in July 2016, in the wake of the April 2016 Panama Papers revelations.

Challenges

The EU has made significant progress in recent years to enhance tax transparency and strengthen cooperation between the member states' tax authorities.

And recent amendments to anti-money-laundering legislation recognise the links between money laundering and tax evasion, as well as the challenges faced in prevention.

Media leaks such as the Panama Papers, revealing large-scale concealment of offshore funds, have highlighted areas where further measures still need to be taken. The transparency framework must be further reinforced at both EU and international levels.

Automatic exchange of information

In particular, tax authorities need greater access to information on the beneficial ownership of intermediary entities and other relevant customer due diligence information. The directive will enable them to access that information in monitoring the proper application of rules on the automatic exchange of tax information.

Where a financial account holder is an intermediary structure, financial institutions are required by directive 2014/107/EU to look through that entity and report its beneficial ownership. Applying that provision relies on information held by authorities responsible for the prevention of money laundering, pursuant to directive 2015/849/EU.

Access to that information will ensure that tax authorities are better equipped to fulfill their monitoring obligations. It will thus help prevent tax evasion and tax fraud.

Next steps

Agreement was reached at a meeting of the Economic and Financial Affairs Council, without discussion. The Council will adopt the directive once the European Parliament has given its opinion.

The directive requires unanimity within the Council, after consulting the Parliament. (Legal basis: articles 113 and 115 of the Treaty on the Functioning of the European Union.)

 

Giovanni Kessler, Director-General of the European Anti-Fraud Office (OLAF) called for a standardized, interconnected, easy-to-use registry of national bank accounts which would be available to all EU enforcement agencies.

"Knowing Bank Accounts are Traceable would have a powerful Deterrent Effect on Individuals...

Traceability would also Increase Detection Rates of

Fraudulent Activities..." 



 

For more details on this matter click Proposal for a Council Directive on access to anti-money-laundering information by tax authorities.

 

 

 

Are you a US Person with a

Not So Secret Foreign Bank Account?

 

Having FATCA & EU

Information Sharing Problems?

 

 

 

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TE/GE Announces New IDR Management Process

The Tax Exempt and Government Entities Division of the Internal Revenue Service has issued new internal guidance for its agents on issuing information document requests (IDRs). The IRS issues IDRs to gather information during an examination. The new process will go into effect on April 1, 2017. Prior to its implementation, TE/GE will provide training to its agents on the new process.

Under the new process:

1.      Taxpayers will be involved in the IDR process.

2.       Examiners will discuss the issue being examined and the information needed with the taxpayer prior to issuing an IDR.

3.       Examiners will ensure that the IDR clearly states the issue and the relevant information they are requesting.

4.       If the taxpayer does not timely provide the information requested in the IDR by the agreed upon date, including extensions, the examiner will issue a delinquency notice.

5.       If the taxpayer fails to respond to the delinquency notice or provides an incomplete response, the examiner will issue a pre-summons notice to advise the taxpayer that the IRS will issue a summons unless the missing items are fully provided.

6.       A summons will be issued if the taxpayer fails to provide a complete response to the pre-summons letter by its response due date.

The new process requires the examiners’ managers to be actively involved early in the process and ensures that IRS Counsel is prepared to enforce IDRs through the issuance of a summons when necessary. Throughout this process, the IRS will respect taxpayer rights‎ and the changes will reflect the agency's commitment to the Taxpayer Bill of Rights.

The updated process will:

·         Provide for open and meaningful communication between the IRS and taxpayers.

·         Reduce taxpayer burden and provide consistent treatment of taxpayers.

·         Allow the IRS to secure more complete and timely responses to IDRs.

·         Provide consistent timelines for IRS agents to review IDR responses.

·         Promote timely issue resolution.

 

 Have a Tax Problem?

 

Don't Hide The Your Head In The Sand

 

 

 

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or Toll Free at 888-8TaxAid (888 882-9243).
 

 

New Fast Track Mediation - Collection Procedure 2016-57

Revenue Procedure 2016-57 replaces Fast Track Mediation (as outlined in Rev. Proc. 2003-41) with Fast Track Mediation—Collection. 

Fast Track Mediation—Collection provides taxpayers an opportunity to resolve certain offer-in-compromise and trust fund recovery penalty issues and cases worked by Collection on an expedited basis with an Office of Appeals mediator serving as a neutral party.   

Revenue Procedure 2016-57 will be in 2016-49, dated December 5, 2016

 Have a Tax Problem?

 

Don't Hide The Your Head In The Sand

 

 

 

Contact the Tax Lawyers at

Marini & Associates, P.A.

 

 for a FREE Tax Consultation Contact US at 

www.TaxAid.com or www.OVDPLaw.com

or Toll Free at 888-8TaxAid (888 882-9243).
 

 

Republican Congress & Senate May "Bust Up The IRS"

According to Law360, the existing structure of the Internal Revenue Service could be on shaky ground with Republicans controlling Congress and a proposal to shrink the agency to three smaller units focused on individual taxation, corporate taxes and dispute resolution based on the style of a small claims court.

House Ways and Means Committee Chairman Kevin Brady, R-Texas, said during a conference hosted by Bloomberg BNA and KPMG LLP on Tuesday that the House GOP, which released a blueprint for tax reform in June, wants President-elect Donald Trump “to hit the ground running” on major policy changes to lower tax rates and “bust up the IRS.”

 

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Not Getting Through To The IRS

 

 

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Treasury Issues Final & Temporary Section 385 Regs - But May Not Last Under President Trump?

As part of the Obama administration’s announcement of a crackdown on inversions the U.S. Treasury issued final & temporary proposed regulations that would dramatically change the taxation of corporate debt issued to related corporations having nothing to do with inversions or foreign acquisitions. In a 518-page Treasury Decision, IRS has issued final and temporary regs under Code Sec. 385. Under these regulations, debt issued by a corporation is treated as equity for all U.S. federal tax purposes if the debt is not issued for cash or property, but is instead

1. (i) issued in a distribution to a related corporate shareholder,
2. (ii) issued in exchange for stock of a member of the same affiliated group or
3. (iii) issued in an asset reorganization between members of the same affiliated group. 

The new regulations restrict the ability of corporations to engage in earnings stripping by treating financial instruments that taxpayers purport to be debt as equity in certain circumstances. They also require that corporations claiming interest deductions on related-party loans provide documentation for the loans, similar to the common practice for third-party loans.  The ability to minimize income tax liabilities through the issuance of related-party financial instruments is not, however, limited to the cross-border context, so these rules also apply to related U.S. affiliates of a corporate group.  

In a statement released by the Treasury Department  the U.S. Department of Treasury and the Internal Revenue Service (IRS) issued final regulations to address earnings stripping which will further reduce the benefits of corporate tax inversions, level the playing field between U.S. and non-U.S. businesses, and limit the ability of companies to lower their tax bills through transactions involving debt that do not support new investment in the United States. These regulations also require large corporations claiming interest deductions to document loans to and from their affiliates, just as businesses of all sizes do when they borrow from unrelated lenders. The rules were proposed in April along with temporary anti-inversion regulations.  The final rules announced today are the product of extensive public comment and engagement.
 

Coupled with Treasury’s previous actions to address corporate inversions, these final regulations balance the operational needs of companies while preventing the erosion of our U.S. corporate tax base. Specifically, today’s final regulations narrowly target problematic earnings stripping transactions, transactions that generate deductions for interest payments on related-party debt that does not finance new investment in the United States, while minimizing unintended consequences for regular business activities. 

• Exempting cash pools and short-term loans: Treasury requested comments in the proposed regulations on whether special rules are warranted for cash pools, cash sweeps, and similar arrangements. In response to thoughtful feedback, Treasury is providing a broad exemption for cash pools, which are essentially common funding accounts for related businesses.  Treasury is also providing an exemption for loans that are short-term in both form and substance.

• Providing limited exemptions for certain entities where the risk of earnings stripping is low:  Transactions between foreign subsidiaries of U.S. multinational corporations and transactions between pass-through businesses are exempt from the final regulations. Financial institutions and insurance companies that are subject to regulatory oversight regarding their capital structure are also excluded from certain aspects of the rules.

• Expanding exceptions for ordinary business transactions: Treasury has significantly expanded the exceptions for distributions to generally include all future earnings and allowing corporations to net distributions against capital contributions. Treasury is also including additional exceptions for ordinary course transactions, such as acquisitions of stock associated with employee compensation plans. 

• Easing documentation requirements:  Treasury has relaxed the intercompany loan documentation rules for U.S. borrowers. The regulations also extend the deadline by one year until January 1, 2018. 

However, these recently finalized regulations that characterize debt as equity for tax purposes could potentially be revoked under President-elect Donald Trump’s administration and a Republican-controlled Congress, according to House Ways and Means Committee Chairman Kevin Brady, R-Texas.
 

Even though the IRS ultimately scaled back the scope of the proposed rules, Brady said at a conference hosted by Bloomberg BNA and KPMG LLP on Tuesday that the rules still harm the economy from a “pro-growth” perspective by discouraging investments in the U.S.

 

Have a Tax Problem?

 

Don't Hide The Your Head In The Sand

 

 

By Running Away To A Foreign Country

 

 

Contact the Tax Lawyers at

Marini & Associates, P.A.

 

 for a FREE Tax Consultation Contact US at 

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or Toll Free at 888-8TaxAid (888 882-9243).
 

 

 

 

 

 
Sources:

US Treasury Department

US Treasury Department (fact sheet)