Some Tax Law Changes That Take Effect in 2017

No new tax legislation has come forth yet, but per tax laws passed in prior years, some changes in the law will occur in 2017. Chief among them:

The floor beneath the itemized deduction for medical expenses of taxpayers who are age 65 or older increases from 7.5% of AGI to 10% of AGI. Thus, fewer medical expense deductions for older taxpayers. Code §213.

Forms W-2, W-3, and returns to report non-employee compensation (e.g., Form 1099-MISC), must be filed on or before January 31 of the year following the calendar year to which such returns relate (formerly, these were due on February 28, and not until March 31 for electronic filings). And, those returns are no longer eligible for the extended filing date for electronically filed returns. Code § 6071(c). Also, there are no more automatic Form W-2 extensions - one 30 day extension can be requested on a Form 8809.

Partnerships now have to file their income tax returns by the 15th day of the third month after the end of their tax year (e.g., March 15 for calendar year entities). Partnerships previously had until the 15th day of the fourth month. C corporations now don’t need to file until the 15th day of the fourth month, instead of the prior 15th day of the third month rule. Extension rules have also been changed for some entities. For a table summarizing all of the new filing deadlines for entities, click here.

Taxpayers who have not used an ITIN at least once in the past three years will no longer be able to use that ITIN on a tax return as of Jan. 1, 2017 and will need to obtain a new one. An ITIN is an individual taxpayer identification number. It is issued to individuals that are not eligible to receive a Social Security number such as noncitizens and nonresidents of the U.S. Code §6109(i)(3).

Large business and international taxpayers that request an examination to resolve specific issues relating to returns that are neither due nor filed must pay a user fee. The fee is being increased from $134,000 to $218,000. Rev. Proc. 2016-30. Nothing like a tax compliance system that is so complex that taxpayers must pay $218,000 out of their own pockets to the government to help resolve uncertainties in how it applies to them.