Recent Tax Developments

The following is a summary of important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.

Business Return Due Date Changes — On 7/31/15, President Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (H.R. 3236) (Highway Act) into law, which includes some significant changes to longstanding tax provisions. The Highway Act makes both partnership and S corporation returns due March 15th following the close of the calendar year (or 15th day of the third month following the close of a fiscal year) for years beginning after 12/31/15. The tax filing deadline for C corporations is changed to April 15th (or 15th day of the fourth month following the close of a fiscal year) for returns for years beginning after 12/31/15. However, for C corporations with a 6/30 year end, the changes are effective for years beginning after 12/31/25. The automatic extension period for these returns has also been adjusted. The Highway Act includes other tax compliance provisions.

Supreme Court upholds subsidies for health care purchased on Federal Exchange. The Supreme Court by a 6-3 vote determined that premium tax credits (also known as health insurance subsidies) under the Affordable Care Act (ACA), are not limited to taxpayers who live in States that have established their own health insurance Exchange but are also available to taxpayers living in States that rely on a Federal Exchange.

Supreme Court declares nationwide right to same-sex marriage. The Supreme Court, in a 5-4 decision, struck down four state-wide bans on same-sex marriage, holding that the Fourteenth Amendment requires all States to license a marriage between two people of the same sex.

Penalties on Information Returns. The tax rules impose a penalty on taxpayers that fail to file correct information returns (such as IRS Form 1099) with the IRS. There’s a separate, but parallel, penalty on taxpayers that fail to provide the payee with a correct copy of the information return that was required to be filed with the IRS. The penalties are based on the duration of the delinquency and whether the delinquency was intentional, and are subject to maximums that depend on the size of the taxpayer.

New tax-advantaged ABLE accounts. For tax years beginning after Dec. 31, 2014, states may establish tax-exempt “Achieving a Better Life Experience” (ABLE) accounts, which can be created by disabled individuals to support themselves or by families to support their disabled dependents. Contributions to the accounts are made on an after-tax basis (i.e., contributions aren’t deductible), but assets in the account grow tax free. Withdrawals are tax-free if the money is used for qualified disability-related expenses.