PATH Act: Will it affect your path in 2017?

Your Guide to State, Local, Federal, Estate + International Taxation

As the world we live in has become much more technologically advanced, so have the minds of criminals. They have found ways to file fraudulent tax returns. If they can get a hold of your personal information, they will take that and file a tax return claiming a refund. In turn, this prevents you from filing your return as one was already filed under your name and taxpayer identification number. In order to help protect you from this scheme there are important new deadlines you should be aware of.

PATH Act, government, tax

In 2015, Congress enacted the PATH Act (Protecting Americans from Tax Hikes Act of 2015), which made significant revisions to the due dates for filing many important and common returns. These revisions are being made in order to accelerate the timing and processing of tax returns so as to combat tax fraud and identity theft. The changes apply for the first time in 2017 for the 2016 calendar year tax returns. Also note that the revised due dates could apply to short year 2016 tax returns.

Here is a quick summary of a few changes:

  • March 15 (Extensions until Sept. 15): Form 1065, U.S. Return of Partnership Income; and Form 1120S, U.S. Income Tax Return for an S Corporation. Note: This is the due date for the tax return and also for the Schedules K-1 that the entity must provide to its owners.
  • April 15 (Extensions until Oct. 15, unless noted below): Form 1040, U.S. Individual Income Tax Return; Form 1041, U.S. Income Tax Return for Estates and Trusts (extensions until Sept. 30); Form 1120, U.S. Corporation Income Tax Return (extensions until Sept. 15 until 2026); and FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR) (any late filing penalty for a first-time filer may be waived).

Also of important note, individuals claiming the Earned Income Tax Credit (EITC) along with a credit or refund for an overpayment will not receive that credit or refund until after the 15th day of the second month following the close of that tax year. Individual taxpayers are generally calendar year taxpayers. Thus, for most taxpayers who claim the EITC, this rule would apply such that a refund of tax would not be made to the taxpayer prior to February 15 of the year following the calendar year to which the taxes relate.

These are only a few of the important changes taking place for the 2016 tax year, please consult with your tax advisor to learn of those changes which apply to your situation.

Michael Willett