Although Congress extended, or made permanent, various favorable provisions of the tax law through the Protecting Americans from Tax Hikes Act of 2015, (“PATH Act”), the PATH Act also included some less-favorable changes for businesses and employers regarding certain information reporting.
Filing Date Requirements for Forms W-2 (Wage and Tax Statement), W-3 (Transmittal of Wage and Tax Statement) and Form 1099 for Reporting Non-Employee Compensation
One change is related to the filing date requirements for Forms W-2 (Wage and Tax Statement), W-3 (Transmittal of Wage and Tax Statement), and Form 1099 for reporting non-employee compensation. These forms will now have to be filed with the Social Security Administration, on or before January 31, in the year following the calendar year to which the returns relate, with no extensions for electronically submitted forms. This new provision will first apply to returns required to be filed after December 31, 2016. Forms required to be filed for payments made in 2015 will still be due by February 29, 2016, and by March 31, 2016 for electronically submitted forms. The new January 31 filing date will be consistent with the date that the forms are required to be provided to the payees.
These changes in filing requirements are the response from the Internal Revenue Service (“IRS”) and Congress to the growing threat of refund fraud and identity theft. In the past, the IRS has had to process some returns, and issue refunds, based on information that the taxpayer provided without having all of the third-party payer information to match with the returns. This opened up the possibility that some filers could fraudulently, or erroneously, report income information. However, with the change to the January 31 filing due date, the information will be available for comparison to that which was reported on tax returns much sooner, thereby, reducing processing time and reducing the risk of fraudulent tax refunds.