Line items


IRS confirms instructions’ 6-month extension for C corp. returns

On its website (irs.gov), the IRS clarified that the December 2016 revision of the instructions for Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, correctly states that calendar-year C corporations are eligible for an automatic six-month filing date extension for income tax returns, notwithstanding Sec. 6081(b), which provides a five-month extension until 2026. The latter provision was part of a revision of filing due dates for C corporation and passthrough returns enacted in 2015 (see "Tax Matters: Return Due Dates Changed," JofA, Oct. 2015). The IRS explained that a six-month extension is authorized under the general rule of Sec. 6081(a). The instructions do not change the seven-month extension allowed until 2026 for C corporations with a fiscal year ending on June 30.


Small employer HRA notice deadline pushed out

The IRS extended the date by which eligible employers must notify eligible employees of a qualified small employer health reimbursement arrangement (HRA). Under provisions enacted late in 2016, an eligible employer (generally, one with fewer than 50 full-time employees or equivalencies) that does not offer a group health plan may provide a small employer HRA. Eligible employers must furnish a written notice to employees of the small employer HRA at least 90 days before the beginning of a year for which it is offered. A penalty for failure to do so applies for years beginning after Dec. 31, 2016, with relief for 2017 if furnished no later than 90 days after enactment of the provision (March 13, 2017). In Notice 2017-20, the IRS extended that deadline to a yet-to-be specified date no earlier than 90 days after it issues additional guidance concerning contents of the required notice.


IRS does not acquiesce to decision on ranching interest

In Action on Decision 2017-1, the IRS stated it will not follow outside the Fifth Circuit that court's holding in Burnett Ranches Ltd., 753 F.3d 143 (5th Cir. 2014). In that case, the Fifth Circuit held that a taxpayer actively participated in the management of a ranch in which she held a limited partner majority interest through her wholly owned S corporation, and, thus, the partnership was not a "farming syndicate" tax shelter. As a result, the taxpayer was entitled to use the cash method of accounting rather than, as the government argued, the accrual method.

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