Monthly Archives: August 2015

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Many IRS Tax Return Due Dates Just Changed – Plus – The IRS may be able to Audit SIX Years of Tax Returns

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Many IRS Tax Return Due Dates Just Changed, FBARs Too

Due date

The due date for many tax returns are changing.  Starting after December 31, 2015:

  • Partnership tax returns are due March 15, NOT April 15 as in the past. If your partnership isn’t on a calendar year, the return is due on the 15th day of the third month following the close of your tax year.
  • C corporation tax returns are due April 15, NOT March 15. For non-calendar years, it is due on the 15th day of the fourth month following the close of the tax year.
  • S corporation tax returns remain unchanged—they are still due March 15, or the third month following the close of the taxable year;
  • There are other deadline filing rules too.

These are, by far, not the only changes.

Other tax law changes

These and other tax law changes were tucked into an unlikely non-tax law, H.R. 3236, the “Surface Transportation and Veterans Health Care Choice Improvements Act of 2015”.  A few of the other changes are:

  • Giving the IRS an increased audit period from three to six years in many cases.
  • The due dates on FBAR reports for foreign bank accounts have also changed.

Extending time to allow an IRS Audit

Extending the time in which the IRS may audit is a big deal!  We are accustomed to a three-year period, called the “Statute of Limitations” in which the IRS can audit.  Being subject to a six-year period, called an extended statute of limitations, can be a harsh reality.  This six-year statute can be triggered by an under reported gross income of 25% or more.  The definition of what is factored into the 25% understatement is new; an over or understatement of “Basis” can be a part of, or all of the necessary 25% misstatement of gross income.

Basis

Basis is a complex tax topic.  Those who buy and sell capital assets such as stocks, bonds, real estate and many other assets (i.e., race horses) need to keep careful records of how much is invested into these assets.

Basis Errors can be 100% Accidental!

S-Corps are particularly vulnerable to accidental basis misstatements!  In S-Corps and LLC you can make an honest mistake and misstate your basis by a very large amount and be totally unaware of the error until the IRS (or your CPA) points the basis misstatement out to you, often with dire consequences.

 

 

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