REMINDER: Employers and small businesses have a new deadline, January 31, 2017, for filing Forms W-2. The acceleration of this deadline is the result of a new federal law aimed at helping the IRS detect and prevent refund fraud. For similar reasons, the new law also requires the IRS to hold refunds involving two key refundable tax credits until at least February 15, 2017. The January 31 deadline of past years for employers furnishing copies of Forms W-2 to their employees remains the same.
Enacted in December of 2015, the Protecting Americans from Tax Hikes (PATH) Act requires employers to file and submit their copies of Form W-2 to the Social Security Administration by January 31st. This new January deadline also applies to certain Forms 1099-MISC reporting non-employee compensation for payments such as those to independent contractors.
In past years, the filing deadline for submitting copies of these forms was the end of February for paper filers, and the end of March, for electronic filers. The PATH Act additionally changes requests for extensions to file Form W-2, as only one 30-day non-automatic extension to file Form W-2 is available. Employers and small businesses must complete and file Form 8809 Application for Extension of Time to File Information Returns by January 31st.
The IRS hopes that the new accelerated deadline will help it more easily identify errors on taxpayer returns. By receiving these W-2s and 1099s forms earlier in the year, even if only a month, the IRS expects to more easily verify the legitimacy of tax returns and any resulting tax refunds. Thus, in many cases, this will allow the IRS to more expeditiously release tax refunds.
Because of the implementations of the PATH Act, some taxpayers may receive their refunds later than usual. PATH requires the IRS to hold a taxpayer’s refund for any tax return claiming either the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) until February 15. The IRS by law must hold the entire refund, not just the portion related to the EITC or ACTC.
Despite these changes, taxpayers should file their returns as they would normally. Whether or not they claim the EITC or ACTC, taxpayers should not plan on receiving a refund by a certain date. Although the IRS issues more than 90% of tax refunds in less than 21 days, some returns are obviously held for further review.
In order to ensure that taxpayers make a smooth transition in light of this important law change, consult a tax professional. Contact THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation, call 212-490-0704.
