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3-3-2017 - REMINDER: March 15

  • Wednesday, Mar. 15 is the due date for 2016 calendar year partnership and S corporation returns and the deadline for several other federal-tax-related actions, including the following:

  • Partnership and S corporation returns. Calendar year partnerships, including electing large partnerships, and S corporations must file their 2016 returns, and provide each partner/shareholder with a copy of Schedule K-1, by Mar. 15, 2017, or else file for an automatic 6-month extension on Form 7004. See Code Sec. 6072(b). S corporations must also pay any tax due with the return by Mar. 15, 2017.

  • Form 1042-S. In general, a withholding agent must file an information return on Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, to report amounts paid to foreign persons that are reportable under Chapter 3 and Chapter 4 of Subtitle A of the Code. Form 1042-S, whether filed on paper or electronically, must be filed with IRS by Mar. 15, 2017. Form 1042-S filers also are required to furnish Form 1042-S to the recipient of the income by Mar. 15, 2017. (Reg. § 1.1474-1(d)(1))

  • Bonus payments. Accrual-basis business can take a 2016 deduction for some bonuses not paid until 2017. An accrual-basis business can take a deduction for its current tax year for a bonus not actually paid to its employee until the following tax year if

  • The employee doesn't own more than 50% in value of the business,

  • The bonus is properly accrued on its books for the current tax year, and

  • The bonus is actually paid within the first 2 ½ months of the following tax year.

  • For a calendar year taxpayer, that means actual payment by Mar. 15, 2017. (Reg. § 1.404(b)-1T, Q&A 2)


  • Electing S corporation status. The S corporation election is made by the corporation (Code Sec. 1362(a)(1)) by filing a Form 2553 signed by its authorized officer, with the required shareholder consents (and IRS user fee), at the IRS Service Center designated on the form. (Reg. § 1.1362-6(a)(2)) An S election for a tax year may be made during the preceding tax year, or by the 15th day of the third month of the tax year for which it's to be effective. (Code Sec. 1362(b)(1))

  • Cafeteria plan grace period. Prop Reg § 1.125-1(e)(1), a reliance reg, provides that a cafeteria plan may, at the employer's option, include a grace period of up to the 15th day of the third month immediately following the end of each plan year. If a cafeteria plan provides for a grace period, an employee who has unused benefits or contributions relating to a qualified benefit (for example, health flexible spending arrangement (health FSA) or dependent care assistance) from the immediately preceding plan year, and who incurs expenses for that same qualified benefit during the grace period, may be paid or reimbursed for those expenses from the unused benefits or contributions as if the expenses had been incurred in the immediately preceding plan year.

  • References: For due date of partnerships and S corporation returns, see FTC 2d/FIN ¶ S-4923; United States Tax Reporter ¶ 60,724. For when year-end bonuses must be paid—i.e., the 2 ½ month rule, see FTC 2d/FIN ¶ H-3919; United States Tax Reporter ¶ 4044.16.

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