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UHY LLP Michigan Practice
OCTOBER 2016
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CONGRESS CHANGES 2016 FILING DEADLINES
By Andy Moceri, CPA
If you are required to file partnership tax returns, C corporation tax returns, or foreign information reporting (FinCen 114/FBAR), the Surface Transportation Act of 2015 ("the Highway Act") brings some actionable news regarding revised filing deadlines effective for 2016 tax returns. The current partnership return deadline imposes a problem for many partners to timely file their returns by April 15. The partnership due date change may give more time for partners to include any Schedule(s) K-1 income and/or loss on their personal income tax returns and file by April 15.
Under the current filing rules, most calendar year partnership tax returns are due on April 15. Generally for 2016 tax year returns, the Highway Act accelerates the due date to March 15 for filing partnership tax returns and issuing Schedules K-1 to partners (the same due date as S corporations).
Calendar year C corporations will get a little break with a change in filing date from March 15 to April 15. This new filing date will coincide with the first quarter estimated tax payment due date for the next tax year. C corporations that currently make tax return or extension payments on March 15 and 1st quarter estimated tax payments on April 15 will need to plan their cash flow needs to make both payments in April beginning in 2017. One interesting note in the new law: the filing date for a C corporation with a June 30 year end does not change until the year 2026.
Until the Highway Act was passed, the annual foreign bank account reporting (FBAR) on Form FinCEN 114 was required to be completed on one specific date - June 30. Now, the due date for Form FinCEN 114 will be synchronized with the due date for filing individual income tax returns - both will be due April 15. In addition, for the first time, taxpayers will be able to request an extension of time to file their Form FinCEN 114 and file by as late as October 15.
If you have any questions, contact your professional at UHY LLP in Detroit 313 964 1040, Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040, or visit us on the web at www.uhy-us.com.
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IRS TO LAUNCH NOTIFICATION PROCESS FOR SUSPECTED EMPLOYMENT-RELATED IDENTITY THEFT IN MARCH 2017
By Lawrence Yee, CPA
According to the Treasury Inspector General for Tax Administration (TIGTA) report No. 2016-40-065, during the period February 2011 to December 2015, the Internal Revenue Service (IRS) identified almost 1.1 million taxpayers who were victims of employment-related identity theft. Employment-related identity theft is when an identity thief uses a stolen social security number of a taxpayer when applying for employment.
According to the TIGTA report, most taxpayers will realize they have been a victim when the IRS sends them a notice alerting them that there is a discrepancy in the income reported on their tax return and the information the IRS received through its Automated Underreporter Program. It seems the IRS would be in a position to notify affected parties, however, according to TIGTA, the IRS has not developed a process to ensure that the Social Security Administration is informed of any fraudulent wages that they find.
TIGTA has since recommended that the IRS develop a process to identify all victims of employee-related identity theft and include those identified before 2017. The IRS has agreed to launch a new notification process March 15, 2017, and will evaluate the process after the first year and decide how to handle previously identified victims.
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SAVE IN CAPITAL GAINS TAXES WITH A REVERSE LIKE-KIND EXCHANGE
By Brent Jones, CPA
Are you looking to buy a new property but haven't been able to sell your existing one? Or perhaps it would make more sense for you to keep your existing property while you make improvements to your new property? Do you want to defer the taxes on the sale of your existing property? If so, then you may be a candidate for a reverse like-kind exchange.
In a reverse like-kind exchange, a taxpayer acquires replacement property before his intended relinquished property is sold. The taxpayer must hire an intermediary under qualified exchange accommodation arrangements (QEAA) to facilitate the transaction. The qualified intermediary will contract an exchange accommodation titleholder (referred to as an "EAT"); this must be done prior to the acquisition of the new property. The EAT then takes the title to the "parked" property to complete the exchange.
Under Rev. Proc. 2000-37, the IRS will recognize the EAT as the titleholder to the parked property until the relinquished property is sold. The EAT is generally set-up as a single member limited liability company whose sole purpose is to park property; and cannot be owned by the taxpayer, any agent of the taxpayer or a related party to the taxpayer. Once the EAT is set up, the property to be relinquished must be identified on or before the 45 days after the transfer; no later than 180 days after the relinquished property is transferred either directly or indirectly through the qualified intermediary or is transferred to a person who is not the taxpayer or disqualified; and the combined time period that the relinquished and replacement property are held in the QEAA does not exceed 180 days.
A reverse like-kind exchange can potentially save thousands in capital gains taxes. If you feel you might benefit, contact your professional at UHY LLP in Detroit 313 964 1040, Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040, or visit us on the web at www.uhy-us.com. |
DEPARTMENT OF LABOR FIDUCIARY RULE: WHAT YOU NEED TO KNOW
By Nichole Haviaras, CPA
As 2017 approaches, retirement plan sponsors need to be prepared for the Department of Labor's recently modified rules that affect ERISA retirement plans (as well as individual retirement accounts and even some health savings accounts). Under previously implemented rules, some investment advisors of retirement plans (those that were generally compensated via commissions and mutual fund management fees) were not held to a fiduciary standard - requiring only that their advice be "suitable" to their clients. Under the new rule, which becomes effective April 10, 2017, most investment advisors to plans (regardless of the manner in which they are compensated) will be considered fiduciaries. Under this more stringent standard, advisors are required to put clients' interests first and "act with the care, skill, prudence, and diligence that a prudent person would exercise based on current circumstances." As a plan sponsor, you should request a copy of a fiduciary agreement in writing; many advisors are already complying with the new rule and can provide the agreement today. With this rule in place, it is hoped that costs will be restrained while the competency and trust in plan advisors go up.
For more information or questions on this topic, please contact your professional at UHY LLP in Detroit 313 964 1040, Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040, or visit us on the web at www.uhy-us.com.
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EVENTS CALENDAR
10/20 UHY LLP Annual Manufacturing Outlook Click here
11/3 UHY LLP Annual Construction Outlook Click here
11/10 UHY LLP Annual Not-For-Profit Update Click here
12/8 UHY LLP Annual Accounting & Business Conference Click here
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Published by UHY LLP News.
Copyright � 2013 UHY LLP. All rights reserved.
Our firm provides the information in this newsletter as tax information and general business or economic information or analysis for educational purposes, and none of the information contained herein is intended to serve as a solicitation of any service or product. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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