Important 2016 Updates from the IRS

It's still a little early to think about filing 2016 taxes. But the IRS has announced some big changes that could affect your 1099-MISC and W-2 filings.

First, let’s look at the 1099-MISC ...

There has been a change to the 1099-MISC filing deadline.

• If entering data in Box 7 (non-employee compensation): The form must be filed with the IRS by January 31, 2017 regardless of whether using paper or filing electronically. (Previously, the e-file date was March 31.)
• If no data in Box 7: You have until February 28, 2017 if using paper, and March 31 if filing online.
  

Please note there has not been a change to the due dates for recipient copies. Your independent contractors must receive their copies of the 1099-MISC by the usual deadlines.

Now onto the W-2 ...

The IRS also made a change to the W-2 filing deadline.

• All 2016 W-2 forms must be filed with the Social Security Administration by January 31, 2017 regardless if using paper or filing online. The previous e-file date was March 31.

The process for W-2 extensions also has been altered. Extensions to file with the SSA are no longer automatic. For filings due on or after January 1, 2017, one 30-day extension may be requested. However an application Form 8809 must be used and a detailed explanation of why additional time is needed must be provided. The IRS has stated it will only grant extensions in cases of “extraordinary circumstances or catastrophe.” This does not affect extensions to furnish W-2 forms to employees.

Finally, penalties have increased for:

• Failure to file correct Forms W-2 by due date
• Intentional disregard of filing requirements
• Failure to furnish Forms W-2
• Intentional disregard of payee statement requirements
  
  

The amount of the penalty is based on when the correct Form W-2 is filed:

• $50 per W-2 if the forms are correctly filed within 30 days of the due date.
  • Maximum penalty: $532,000 per year
  • $186,000 maximum for small businesses

• $100 per W-2 if the forms are correctly filed more than 30 days after the due date but before August 1.
  • Maximum penalty: $1,596,500 per year
  • $532,000 maximum for small businesses

• $260 per W-2 if the forms are filed after August 1, corrections are not filed or the W-2 is not filed at all.
  • Maximum penalty: $3,193,000 per year
  • $1,064,000 maximum for small businesses
    
    

These higher penalty amounts apply to returns required to be filed after 12/31/15.

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