On July 31, 2015, President Obama signed into law H.R. 3236, the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015.” This Act provides a three-month extension, through Oct. 29, 2015, of the general expenditure authority for the Highway Trust Fund including its expenditure authority for the Sport Fish Restoration and Boating Trust Fund and the Leaking Underground Storage Tank Trust Fund.

There are a couple of significant income tax law changes that are part of this Act.

New law. Under the Act, an understatement of gross income by reason of an overstatement of unrecovered cost or other basis is an omission from gross income for purposes of the six-year limitations period.

 Somerset Note: The new law effectively overrides the Supreme Court’s holding in Home Concrete & Supply, LLC which had concluded that an overstatement of basis was only a three year statute for IRS examination purposes.

New law. Under The Act a partnership and an S corporation are required to file by March 15 following the close of the calendar year (or for a fiscal year taxpayer, on or before the 15th day of the third month following the close of its fiscal year), and a C corporation is required to file by April 15 (or three and a half months after the close of its tax year) effective for returns for tax years beginning after Dec. 31, 2015) For C corporations with a tax year ending on June 30, the above changes are effective for tax years beginning after Dec. 31, 2025

The Act also provides C corporations with an automatic six-month extension of the applicable filing date. In the case of calendar year C corporations, the automatic extension is up to five months (September 15) until tax years beginning after Dec. 31, 2025, at which time the extension would be up to six months (October 15). For C corporations with tax years ending on June 30, the current law filing date (September 15) remains in effect until tax years beginning after Dec. 31, 2025, and will be extended to October 15 thereafter.

Somerset Note: This new law effectively moves the filing deadline for partnership returns up one month and the filing deadline for C-Corporations back one month. Current law requires a C corporation or an S corporation to file its tax return by March 15 (or within two and a half months after the close of its tax year). Corporations can obtain an automatic three-month extension of the filing due date and can apply for an additional three-month extension—for a total of six months. A partnership is required to file its return by April 15 (or within three and a half months after the close of its tax year), the same date that applies to individuals.