Many taxpayers are adjusting to new due dates and extension periods for tax return filings due in 2017. Partnerships, C corporations, trusts and tax-exempt organizations all are impacted by the new rules, as well as any filers reporting foreign bank account information. The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (The Act) established these new due dates and extension periods, in part to accommodate a request from the American Institute of Certified Public Accountants (AICPA), and in part to provide for increased federal revenues to be used for other provisions of The Act. The new due dates and extension periods apply for all taxpayers to tax years beginning after Dec. 31, 2015.

The C corporation changes mandated by The Act are less straight-forward than the changes for other taxpayers. Both the original time for filing and the extension period for C corporations now vary with respect to the accounting period utilized by the C corporation. To complicate matters further, the IRS unexpectedly announced that calendar-year C corporations are subject immediately to a 6-month extension period, rather than a 5-month extension period provided by the Act. An analysis of the time for filing and extension periods for the various types of C corporations will help to clarify this matter.

C corporations utilizing a June 30 fiscal year remain subject to the traditional time for filing of September 15 (2 ½ months after year-end), but The Act changes the extension period for such C corporations to seven months (to April 15). With the effective date provided by The Act, such C corporations are first impacted for full years ending June 30, 2017. The Act further provides that such June 30 C corporations will be subject to a different set of rules for tax years beginning after Dec. 31, 2025, at which time the original time for filing changes to 3 ½ months after year-end (i.e., October 15), and the extension period will change to six months (i.e., remains at April 15).

C corporations utilizing a fiscal year end other than June 30 now have 3 ½ months after the end of the fiscal year to file, with an extension period of six months under The Act. For example, C corporations with a tax year beginning April 1, 2016, and ending March 31, 2017, must file Form 1120 by the original due date of July 17, 2017, with an extension available until Jan. 16, 2018.

C corporations utilizing a calendar year were subject to another set of rules under the provisions of The Act. Under The Act, such C corporations now have 3 ½ months after the end of the year to file and were given only a five-month extension period. For tax years ending Dec. 31, 2016, this would have produced an original time for filing of April 18, 2017, with a five-month extension period available until Sep. 15, 2017. The Act further provided that a six-month extension period would become available for tax years beginning after Dec. 31, 2025.

Despite this provision of The Act, the IRS has authority to grant a reasonable extension period of up to six months under Code Sec. 6081(a). In draft Form 7004 instructions released previously, the IRS unexpectedly indicated that the six-month extension period for calendar year C corporations would be applicable immediately (for tax years beginning after Dec. 31, 2015). Hence, the original due date for a tax year ending Dec. 31, 2016, is April 18, 2017, with a six-month extension period available until Oct. 15, 2017. Draft instructions to IRS forms cannot be relied upon by taxpayers, which left many questioning whether the six-month indication was an oversight. To resolve this question, the IRS communicated on February 7 that C corporations utilizing a calendar year indeed are eligible for an automatic six-month extension period (for tax years beginning after Dec. 31, 2015).

Accordingly, C corporations utilizing a calendar year now are subject to the same filing dates mandated under The Act for C corporations utilizing a fiscal year other than June 30. This effectively reduces the categories of due dates affecting C corporations from three to two. While this simplifies the ultimate administration of these rules, C corporations in the near term must cope with another change to rules that already changed recently. Still, the six-month extension now available to calendar-year C corporation filers provides additional time to file, which by all accounts should do no harm.  For more information concerning C corporation due dates, please contact your local CBIZ MHM tax professional.

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