Notable changes in tax law compliance for 2016 and 2017
There are increased penalties for failing to file information returns, like 1099s, timely/correctly. Current penalties are $100 for each return. Pursuant to the Trade Preferences Extension Act of 2015 Penalties will increase to $250. Further, penalties double to $500 for “intentional disregard”. These changes are effective starting January 1, 2016. Finally, if the taxpayer takes quick corrective action and re-issues the 1099s with corrected information within 30 days of the due date, there may be some relief on the amount of the penalty assessed.
Starting in 2017, S corporation, partnership and LLC tax returns will be due 2 1/2 months after year end (therefore, March 15 for calendar year tax years instead of April 15) and most C corporation returns will be due 3 1/2 months after year end (therefore, most C corps will now file tax returns on April 15 instead of March 15). Arguably, the IRS made this change in order to require flow-through entities to file their 1120S and 1065 information tax returns along with the Schedule K-1s in March so that the IRS can be watching for the K-1 income when the shareholders, partners and LLC members file their 1040 income tax returns a month later.
Mortgage interest statements, 1098, you receive each year from your lenders will in the future include your outstanding principal balance, the origination date of the loan and the address of the property. This information, arguably, will allow the IRS to catch lump sum payments made on the mortgage in addition to normal monthly payments, allowing the IRS to look for individuals who may have more disposable income than their reported income suggests the taxpayer should have.
