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What may at first glance seem to be small changes in the Protecting Americans from Tax Hikes (PATH) Act may in fact have a large impact on businesses and service providers who prepare and file numerous W-2s and/or 1099s.  

New W-2 Filing Deadline

Beginning with 2016 forms filed in 2017, employers are required to submit forms W-2 and W-3 to the Social Security Administration (SSA) on or before January 31 of the year following the calendar year to which the return relates.  This change applies regardless of whether the W-2 returns are filed on paper or electronically.    

Additionally, the IRS no longer allows an automatic 30-day extension in which to file forms W-2 and W-3 with the SSA, and the IRS has indicated it will grant a 30-day extension of time to file only in limited cases for extraordinary circumstances or catastrophe.  Under the new due date regime, a taxpayer seeking an extension of time to file must submit a form 8809 by the January 31 deadline. The 8809 must include a detailed explanation of why the taxpayer needs additional time and must be signed by the taxpayer under penalties of perjury. 

New 1099 Filing Deadline

The PATH Act also accelerated the date by which 1099s reporting non-employee compensation must be filed with the IRS.  Beginning with 2016 forms that are required to be filed in 2017, any 1099-MISC showing an amount in Box 7 for non-employee compensation must be filed with the IRS by January 31. This change applies regardless of whether the 1099 forms are filed on paper or electronically.  

The due date for 1099-MISC forms for other types of income that do not have an amount in Box 7 for non-employee compensation remains unchanged.

Penalties

Taxpayers not filing information returns on time are subject to penalties under IRC 6721 on a per form basis.  The current base rate of penalty under IRC 6721 is $250 per form.  However, a lower penalty rate may apply if the failure to file is cured within certain timeframes or if the taxpayer’s gross receipts fall below certain limits.

In order to avoid incurring such penalties, taxpayers should make note of the new due dates immediately and plan accordingly to ensure that they are able to compile data and process the forms for filing with the SSA or IRS by January 31.