Per the The Protecting Americans from Tax Hikes (PATH) Act of 2015, deadlines for filing W-2 and 1099 tax forms have been accelerated by 60 days - for both paper and electronic filings. Consequently beginning 2017, for the 2016 reporting year, forms need to be provided to both tax-payers and the IRS / SSA by January 31st. When this falls on a business holiday or weekend (as it does this year) the deadline is pushed to the next business day. So what do these changes mean for the IRS and what do they mean for the tax filer?
The new deadline is expected to dramatically reduce tax refund fraud, a growing problem for the IRS whose fraudulent tax refunds (at least the ones they were able to identify) are close to $230 million. Specifically identity tax refund fraud has been an issue and the fight against it slowed down by the process to verify income with employers. Simultaneous filings allow for easy verification of income and no need to work with employers on the issue.
Previously W-2 and 1099 forms had to be provided to tax payers by January 31st then edited and filed with the IRS / SSA by February 28th for paper forms and March 31st for e-forms. Filing with the IRS / SSA by January 31st makes it so that the deadline is not only 60 days earlier but also coincide with the filing deadlines for Forms 1095-B and 1095-C so
What’s more, the typical 30 day extensions made available by filing a 8809 before or on January 31st, as well as the further 30 day extension for e-files out to May, will be no longer available for the 2016 reporting year. So in other words, January will be an incredibly huge time crunch for payroll and billing. Be kind to your accountants. *One exception where the deadlines are not accelerated, is for 1099-MISC forms that have Box 7 empty.
The previous deadlines allowed for a period where forms would be filed with recipient’s first then, any necessary changes would be made before filing with the IRS or SSA. This entire process is now sidestepped with ultimately simultaneous filings with recipients and the IRS / SSA. This also means that any post end of the year changes and corrections will need to be evaluated and submitted as soon as possible, within the month of January.