If you’re a business owner, be sure to draw a big red circle around the date January 31, 2017, on your calendar: that’s the new due date for filing forms W-2.
Under a new law, the Protecting Americans from Tax Hikes (PATH) Act, enacted last December, the new filing deadline for employers to submit forms W-2 to the Social Security Administration, is January 31. The new January 31 filing deadline also applies to certain forms 1099-MISC reporting non-employee compensation such as payments to independent contractors.
The January 31 deadline for employers to furnish copies of tax forms to employees remains unchanged.
The new law also changes the rules for extending time to file forms W-2. Now, you can only request one 30-day extension to file form W-2, and it is not automatic. If you, as an employer, need an extension, you must file form 8809, Application for Extension of Time to File Information Returns (downloads as a pdf). The form should be completed as soon as you know an extension is necessary, but no later than January 31.
In the past, employers typically had until the end of February, if filing on paper, or the end of March, if filing electronically, to submit these forms. However, the gap between that due date and the beginning of the filing season made it difficult for the Internal Revenue Service (IRS) to match up forms W-2 with tax returns requesting refunds. The result? Room for fraud. The new deadline, which has long been on the wish list for the IRS, will make it easier to verify the legitimacy of tax returns and properly issue refunds to taxpayers. The IRS says that, in many instances, this will enable them to release tax refunds more quickly than in the past.
For many other taxpayers, though, that will not be the case. As I reported before, the PATH Act also requires the IRS to delay refunds involving two key refundable tax credits, the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC), until at least February 15. The new law requires the IRS to hold the entire refund for any taxpayer claiming either of these credits until February 15, and not just the portion related to the EITC or ACTC.
The IRS says that taxpayers should still plan to file their returns as they normally do. However, prepare to exercise some patience. With these changes, you’re bound to see some delays. Normally, the IRS issues more than nine out ten refunds in less than 21 days, but expect delays as returns are held for further review.
To keep disruptions to a minimum, the IRS wants to get the word out now about these changes. “As tax season approaches, the IRS wants to be sure employers, especially smaller businesses, are aware of these new deadlines,” said IRS Commissioner John Koskinen. “We are working with the payroll community and other partners to share this information widely.”
