On July 31, 2015, President Obama signed into law H.R. 3236, the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015” (the Act) which provides a three-month extension, through Oct. 29, 2015, of the general expenditure authority for the Highway Trust Fund (HTF), including its expenditure authority for the Sport Fish Restoration and Boating Trust Fund and the Leaking Underground Storage Tank (LUST) Trust Fund.

Also, included in the Act are the following tax compliance provisions which we wanted you to be aware of.

1. Additional Details Required To Be Disclosed On Mortgage Information Returns
Under the new law, the return must also include the amount of the outstanding mortgage principal as of the beginning of the calendar year, the mortgage origination date and the address (or other description, in the case of a property without an address) of the property which secures the mortgage aside from the name and address of the individual from whom the interest was received, the amount of such interest received for the calendar year, the amount of points on the mortgage received during the calendar year and whether such points were paid directly by the borrower, taxpayer identification number (TIN) of the borrower and the name, address, and TIN of the interest recipient.

The mortgage reporting requirements will apply to returns required to be made and statements required to be furnished after Dec. 31, 2016.

2. Basis Overstatement is Income Omission for 6-Year Limitations Period
A 6-year period of limitations, as opposed to three years, applies when a taxpayer “omits from gross income” an amount that’s greater than 25% of the amount of gross income stated in the return.

The Supreme Court, in Home Concrete & Supply, LLC, resolving a split among various Circuit Courts and the Tax Court, determined that an overstatement of basis isn’t an omission of gross income for purposes of the 6-year limitations period. Under this Act, the 6-year limitation would apply in this situation.

The Act’s changes for overstatement of basis are effective for: (1) returns filed after July 31, 2015; and (2) returns filed on or before July 31, 2015, for which limitation period is still open.

3. Adjusted Tax-Filing Deadlines For Partnerships, S Corporations, And C Corporations
Under the new law, a partnership and an S corporation are required to file by March 15 following the close of the calendar year (on or before the 15th day of the third month following the close of its tax year), and a C corporation is required to file by April 15 (or three and a half months after the close of its tax year). The change is effective for returns for tax years beginning after Dec. 31, 2015. For C corporations with a tax year ending on June 30, the above changes are effective for tax years beginning after Dec. 31, 2025.

The deadline for the following tax returns have also been changed:

  • FinCen Form 114 (Foreign Bank Reporting). From June 30 to April 15. However, taxpayers will be allowed an extension period of six months.
  • Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts (Form 3520). From March 15 to  April 15, with a six- month extension.

The extension periods of certain other IRS forms are also adjusted.

  1. Five and one-half months for U.S. Income Tax Return for Estates and Trusts (Form 1041).
  2. Three and one-half months for Annual Return/Report of Employee Benefit Plan (Form 5500).
  3. Six months for the Return of Organization Exempt from Income Tax (Form 5500), Return of Certain Excise Taxes Under Chapters 41 and 42 of the IRC (Form 4720), Split-Interest Trust Information Return (Form 6069), Return of Excise Tax on Excess Contributions to Black Lung Benefit Trust Under Section 4953 and
  4. Computation of Section 192 Deduction (Form 8870), Annual Information Return of a Foreign Trust With a U.S. Owner (Form 3520-A).