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IRS changes some filing deadlines, audit notifications

08/10/2016  |  By: Brian McCuller, JD, CPA, Shareholder, Practice Leader Tax

The Internal Revenue Service recently had two pieces of significant news, one dealing with filing deadlines and the other intended to curb phone scams by changing the way taxpayers are notified of an audit.

Deadline changes
The filing deadline announcement is good news for taxpayers involved in partnerships, and will take off some of the pressure at tax-filing time, starting with the 2017 filing season. The deadline for partnerships to file tax returns (Form 1065) has been moved from April 15 to March 15 for those who operate on a calendar-year basis.

While at first glance, that might seem to increase deadline pressure, it actually will make things easier for the partners in those partnerships. That’s because partnerships are not taxed on their income. Rather the income flows through to the partners — whether they be individuals or some type of corporate entity — and the partners then pay taxes on that income.

Partners are notified how much reportable partnership income they have on a Schedule K-1, which is filed with the partnership’s tax return and is distributed to the partners. Up to now, that meant, for example, if an individual was involved in a partnership, he or she might not receive a K-1 until April 15, the same day their individual tax return was due. That made it extremely difficult to file an individual return without requesting an extension. It would be the equivalent of asking someone with a job to file their tax return on the same day they received their W-2.

Entities such as C Corporations can also be involved in partnerships. To enable them to file on time, their tax return deadlines are being moved from March 15 to April 15 for those filing on a calendar-year basis. That means they will have a month after the new K-1 deadline to file their returns. Previously they had to file returns a month before even receiving a K-1.

For C Corporations using a different filing period, the deadline will also be extended, as will the deadlines for partnerships using a different filing period. A chart of those changes may be found here.

There is one potential complication: State deadlines may be different. You can check on the latest information from the states by consulting two charts created by the American Institute of CPAs, one for partnership returns and the other for corporate returns.

Phone scams
The other announcement from the IRS is intended to fight a rash of phone scams in which taxpayers receive a call, supposedly from the IRS, notifying them that they are being audited. Scammers then attempt to get confidential information or payments from the taxpayer by threatening arrest, deportation, license revocation and other measures. Other fraudulent callers say that the taxpayer is entitled to a large refund and attempt to obtain confidential information in order that the refund may be processed.

Scammers often try to make it appear that the IRS is calling by altering caller ID numbers. They use IRS titles and fake badge numbers to enhance their credibility, and some will have researched the victim’s name, address and other personal information to make the call sound official. The IRS said in January it had received reports on 5,000 taxpayers who fell for the scam over two-plus years, losing more than $26.5 million.

Under a new IRS policy now in effect, all initial contacts with taxpayers about an audit will be made by mail, not by telephone. Initial contact by telephone had been the long-standing method for some parts of the IRS. IRS officials hope this move will help taxpayers recognize a fraudulent call when they receive it.

The IRS also said it is looking at other areas of its operations where taxpayers are contacted to determine whether other methods need to be changed to fend off phone scams and other fraudulent schemes.

Under the new procedures for audit contacts, the IRS may initiate contact by telephone with a taxpayer only after 14 calendar days have elapsed from mailing the letter.

IRS changes some filing deadlines, audit notifications



The Tennessean