November 3, 2016

New Due Dates for 1099s and W-2s Effective for Year-End 2016 Filers

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The Protecting Americans from Tax Hikes (PATH) Act of 2015 modified filing dates of returns and statements relating to employee and non-employee compensation, and created a safe harbor on de-minimis errors on information returns and payee statements effective for the 2016 filing season.

The 2015 PATH Act implemented new filing deadlines for Forms W-2, W-3 and 1099-MISC, which are used to report employee and non-employee compensation. The due date for government copies of such forms to be filed with either the Social Security Administration (SSA) or the Internal Revenue Service (IRS) is now January 31.

Prior to the PATH Act’s enactment, the government copies of Forms W-2 and 1099 were required to be filed on or before the last day of February, if filed using a paper form, and on or before the last day of March, if filed electronically.

The accelerated filing rule applies to both paper and electronic filed returns and statements that relate to calendar years beginning on January 1, 2016.

The change affects only those Forms 1099-MISC that report non-employee compensation. The filing deadline for other forms in the 1099 series remains unchanged.

Filers are allowed an automatic extension to file with the IRS or SSA, but still must mail the payee copies by January 31. Filers can take advantage of an automatic 30-day extension by filing Form 8809, “Application for Extension of Time to File Information Returns,” before the due date. Filers are also allowed an additional non-automatic 30-day extension, which must be requested before the automatic extension expires.

Failure to comply with the new filing deadlines may expose a business to substantial IRS penalties.

The PATH Act also establishes a safe harbor from penalties for the failure to file correct information returns and for failure to furnish correct payee statements by providing that if the error is $100 or less ($25 or less in the case of errors involving tax withholding), the issuer of the information is not required to file a corrected return and no penalty will be imposed. However, a recipient of a 1099 or W-2 with an error can elect to have a corrected form issued and filed, regardless of the amount.

This new law is a significant change in filing dates and will affect most employers and all businesses that issue 1099’s to consultants. All payors should take note and indicate/record the new filing dates.

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