Usually, the due date for filing US individual income tax returns is April 15th. This time it’s different. The IRS, and also the Massachusetts Department of Revenue (DOR), have announced that the due date for Massachusetts residents filing individual income tax returns, and also for Massachusetts estates and trusts whose tax years end December 31, 2015, will be Tuesday, April 19, 2016. But, there’s a “Gotcha”. (Actually, there is a “Full Gotcha” and a ”Semi-Gotcha”.)
What’s Going On?
The usual due date, April 15, 2016, falls out this year on a Friday; but the next day, April 16th, is not only a Saturday but, also, a public holiday in the District of Columbia. (The holiday is Emancipation Day and commemorates the President Lincoln’s signing the Compensated Emancipation Act which freed the slaves in the District of Columbia). When a state (or DC) public holiday falls on a Saturday it is celebrated on the previous Friday. Therefore, Emancipation Day in the District of Columbia is celebrated on Friday April 15, 2016. As a result, the due date for filing becomes the next business day – Monday, April 18th.
But – April 18th is Patriots Day in Massachusetts (also in Maine), and Patriots Day is a legal holiday in Massachusetts (similarly in Maine). Internal Revenue Code sec. 7503 states that when the last day for performing an act under the US internal revenue laws is a statewide legal holiday in the state where the action may be performed, the day for performing the act is shifted to the next day which is a regular business day (not, itself, a Saturday, Sunday or legal holiday). Quaintly, Treasury Regulation sec. 1.6019-2(d)(1) provides that income tax returns (except for corporation returns) may also be filed by hand at the IRS office that serves the legal residence or place of business of the taxpayer. Of course, there are IRS offices located in and serving legal residences and places of business in Massachusetts. Because Patriots Day is a statewide legal holiday in Massachusetts, Code sec. 7503 allows a Massachusetts resident to delay filing his or her 2015 US income tax by hand at a local IRS office beyond April 18th . Even though the vast majority of Massachusetts residents file their US income tax returns electronically or by mail and they could comply with an April 18th due date by filing by mail or electronically, nevertheless, the IRS has decided that all Massachusetts residents are entitled to the benefit of the quaint regulation. Therefore, all Massachusetts (and Maine) resident individuals will be permitted to file their US income tax returns on April 19th, the next business day after Patriots Day (and regardless of whether they file by hand, electronically or by mail).
Although the IRS Ruling (Rev. Rul. 2015-13) does not say so explicitly, the instructions for the US income tax returns for trusts and estates provides that trusts and estates resident in Massachusetts (and Maine) that have a tax year ending Dec. 31, 2015 may also file their 2015 US income tax returns by April 19, 2016.
The first estimated US income tax voucher and payment for 2016 is normally due April 15, 2016. Because the address for filing the estimated tax voucher and making payment is not the IRS office in Massachusetts but is typically in another state that does not celebrate Patriots Day (Hartford, Conn.) – the first estimated tax voucher and payment for 2016 are due on April 18, 2016 (not April 19, 2016, which is the due date for the 2015 income tax return). (See Rev. Rul. 2015-13 – and, also, IRS Instructions for 2016 Form 1040 ES and for 2016 Form 1041 ES).
The Gotcha follows the holding of an earlier IRS Revenue Ruling, 90-5. However, in 1995 (Notice 95-17), in 2000 (Notice 2000-17) and in 2002 (Notice 2002-12) the IRS decided to not have a Gotcha when the due dates fell out on Patriots Day – that is, the IRS announced that the due dates for the prior year return and for the current year first estimated tax voucher and payment would both be on the day following Patriots Day.
Massachusetts Weighs In
According to the Massachusetts Dept. of Revenue, for individuals, and for trusts and estates with taxable years ending Dec. 31, 2015 – income tax returns for 2015 are due April 19, 2016 – even though April 15, 2016 is not Patriots Day. (Instructions for Massachusetts Form 1 for 2015, Instructions for Massachusetts Form 1-NR/PY for 2015, Instructions for Massachusetts Form 2 for 2015, Massachusetts “Guide To Personal Income Tax – Tax Changes for 2015”.) No rationale is articulated, but it appears that the Massachusetts DOR thinks it would be easier for taxpayers to operate under a common set of filing dates for both the Massachusetts personal income tax for 2015 and the US income tax return for 2015.
In a confusing sequence of pronouncements, it appears that the DOR has ended up with the position that it will consider the first installment of the 2016 Massachusetts estimated income tax (individual and, probably, trusts and estates) as timely filed if filed by April 19, 2016. (Mass. DOR Notice Regarding 2016 April Filing Deadline – appearing on DOR website under “What’s New” for the week of November 15, 2015). This decision, however, does not seem to have come easily.
As it happens, the Instructions for the Mass. estimated income tax vouchers (Instructions for Form 1-ES and Form 2-ES) – also appearing on the DOR website – state that the first estimated tax voucher and payment are due April 15, 2016. The Notice does not mention this but, as a practical matter, the Notice probably overrides the Instructions as a matter of administrative practice and “no harm/no foul” if taxpayers follow the Instructions and file the first estimated tax vouchers and payments early (by April 15th).
Interestingly, the DOR Notice appears to misread the IRS Revenue Ruling. The DOR Notice states as its rationale “The IRS has announced that, because April 18, 2016, is a legal holiday in Massachusetts, for Massachusetts residents tax returns and estimated payments that would normally be due on Friday, April 15, 2016 will be treated as timely if they are filed on or before Tuesday, April 19, 2016. See IRS Rev. Rul. 2015-13. Likewise, for Massachusetts tax purposes, the Department of Revenue will treat all tax returns and payments that would normally be due on Friday, April 15, 2016 as timely if they are filed on or before Tuesday, April 19, 2016.” The problem with the stated rationale for the DOR’s position is that the IRS Revenue Ruling expressly states that for Massachusetts residents and estates and trusts the first estimated tax voucher and payment is due April 18, 2016 because the first estimated vouchers and payments are sent to an IRS office in Hartford, Connecticut – the Revenue Ruling concluding “Thus, A must pay A’s first installment of estimated income tax on or before April 18.”
So, where are we?
|Income tax returns for 2015 (individuals, also estates and trusts with calendar tax years)||April 19, 2016||April 19, 2016|
|First installment of 2016 estimated income tax (individuals, also estates and trusts with calendar tax years)||April 18, 2016||April 19, 2016
(overriding Instructions for the estimated tax vouchers)
Perhaps the simplest approach, if possible, is to submit or post mark all 2015 returns and payments and 2016 first estimated tax vouchers and payments on or before Monday, April 18th – Patriots Day – and not get tripped up. Post offices in Massachusetts are open on Patriots Day, April 18th.
About the Author
Jonathan Davis represents clients in tax law (domestic and international), estate planning (domestic and international), compensation planning, business transactions, and probate. His practice also includes “business divorces” and disputes over estates and trusts.