New Nebraska Law’s Impact on Filing Requirements for Corporations and Partnerships

LB 512 signed into law on May 30^th, 2019, requires all S Corporations, limited liability companies, and partnerships with Nebraska source income to file a Nebraska return for all tax years beginning on or after January 1^st, 2019.

Previously, S Corps, LLCs, and partnerships had to file a Nebraska income tax return if they had nonresident owners and were apportioning income.

The Nebraska Department of Revenue (DOR) encourages all S corporations, limited liability companies, and partnerships to e-file their pass-through entity returns. A Nebraska state ID is required when e-filing a pass though entity return.

A pass-through entity without an assigned Nebraska identification number will need to apply for a number before e-filing a 2019 Nebraska tax return. If your business does not have a Nebraska Tax ID Number, follow the link below to the Nebraska Department of Revenue to register your business.

http://www.revenue.nebraska.gov/electron/online_f20.html

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IRS’s Large Business & International Division to Implement Campaigns

The Internal Revenue Service (“IRS”) Large Business and International (“LB&I”) division recently announced the roll-out of thirteen campaigns as part of the IRS’s examination process.  A campaign is an issue-based compliance process that centers on focused examinations.  These campaigns cover a range of topics, including positions on related party transactions and S Corporation losses claimed in excess of basis.  Campaigns are a new approach to enforcement by the IRS that the IRS hopes will identify the most serious tax administration risks, create specific plans to move toward compliance, and effectively deploy IRS resources.  A taxpayer can be the subject of multiple campaigns during an examination.

The IRS will issue “soft letters” to some taxpayers, in which the IRS identifies the campaign issue and indicates the taxpayer’s return appears to include this position.  The letter will articulate the IRS’s legal position and ask whether the taxpayer agrees to change its position by amending the return.  Soft letters will not be released publicly.

The IRS recently informed taxpayers that the receipt of a soft letter does not mean the IRS has opened an examination.  Further, taxpayers are not required to respond to the letters.  However, failure to respond could lead to an examination.

Taxpayers should be aware that this new approach means businesses and high-net-worth individuals dealing with any of the identified issues may face increased IRS audit risk.  These taxpayers should work with their legal advisors to avoid or prepare for IRS challenges.

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Revised Tax Return Due Dates for Partnerships and C Corporations

President Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (“Act”) into law on July 31, 2015. The Act includes a series of revised tax return filing deadlines for partnerships and C corporations.

Returns for partnerships and entities taxed as a partnership filing a Form 1065 are due March 15 or the 15th day of the third month following the end of the organization’s fiscal year. The previous due date was April 15. Extensions are available for up to six months.

Returns for C corporations and entities taxed as a C corporation filing a Form 1120 are due April 15 or the 15th day of the fourth month following the end of the organization’s fiscal year. The previous due date was March 15. Returns for C corporations with a fiscal year ending on June 30 are due on September 15 until 2025. After 2025, the returns are due on October 15. Most C corporations can receive extensions of up to five months until 2026. After 2026, all C corporations can receive extensions for up to six months.

Tax returns for S corporations remain unchanged and are due on Mach 15 or the 15th day of the third month after the end of the organization’s fiscal year.

The new dates are effective for tax years beginning after December 31, 2015. These changes are not applicable to most filers until tax returns for 2016 are due in 2017, excluding short year filings.

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