Congress recently passed, and the President signed into law, the “Surface Transportation and Veterans Health Care Choice Improvement Act.” While on the surface, the bill was primarily driven to provide an extension to the Highway Trust Fund, it also gave us a handful of tax implications to consider:
Due Date Changes: Beginning in tax years ending after December 31, 2015 – the 2016 tax year for calendar-year taxpayers – the due dates for partnerships and C corporations have switched places, resulting in a March 15 partnership due date and an April 15 C corporation due date for calendar-year taxpayers. In one strange “PayGo” wrinkle, the changes for C corporations with a June 30 year end are not effective until tax years beginning after December 31, 2025. No, that is not a typo – it is a full ten years later.
Another important due-date change centers around the Foreign Bank and Financial Account Reporting (FBAR). That due date historically has been June 30, but will correspond to the individual deadline of April 15 prospectively. To the taxpayer’s benefit, a six-month extension is now available for the FBAR, which is a luxury not previously available.
Veteran Exclusion from ACA Headcounts: For purposes of determining businesses’ obligation to provide “minimum essential” health coverage under the Affordable Care Act (ACA), companies can now exclude veterans from their headcount. Once that headcount rises above 50, the penalty exposure under the ACA is triggered. While the veteran must be covered under TRICARE, or a VA medical coverage program in order to be excluded from the calculation, “applicable large employers” may be able to take this approach to preclude some of the potential penalties levied under the ACA. This allowance serves to further encourage employers to hire talented veterans to work in their growing businesses.
Basis Reporting and Statute Changes: The bill also provides that estates that are required to file an estate return are now also required to report the fair market value of the decedent’s property at the date of death. This change is already in effect for any estate tax returns filed after July 31, 2015. Coupled with this change is a modification to the statute of limitation rules for basis overstatements. Because basis overstatements can lead to omissions from gross income, this legislation allows the IRS to claim the six-year statute of limitations (compared to the standard three-year statute) should that basis overstatement lead to an omission of 25% or more of gross income from a tax return. These two changes are put in place to combat the frequent (potentially abusive) overstatement of basis to reduce the tax liabilities of estate beneficiaries.
Navigating the tax labyrinth can be daunting, but PYA can help you map out a clearer path to understanding. If you have any questions about these or other tax issues, contact one of the experts listed below at PYA (800) 270-9629.
