Reminder: Employers Face New Jan. 31 W-2 Filing Deadline; Some Refunds Delayed Until Feb. 15

[Elrod]

The Internal Revenue Service today reminded employers and small businesses of a new Jan. 31 filing deadline for Forms W-2. The IRS must also hold some refunds until Feb. 15.

A new federal law, aimed at making it easier for the IRS to detect and prevent refund fraud, will accelerate the W-2 filing deadline for employers to Jan. 31. For similar reasons, the new law also requires the IRS to hold refunds involving two key refundable tax credits until at least Feb. 15. Here are details on each of these key dates.

 

https://www.irs.gov/uac/newsroom/reminder-employers-face-new-jan-31-w2-filing-deadline-some-refunds-delayed-until-feb-15

[RitaB]

Oh, yay.  /s

[BLACK BART]

Thanks Elrod.  I think I knew about the 1-31 thing, but it certainly doesn't hurt to be reminded since it's new stuff.  Problem now, of course, will be getting clients to cough up the info in time for us to actually do something about it.

As for the 2-15 refund holdup, my (now) mostly older set either don't care about or get refunds, but I sure feel sorry for our Block/Jackson colleagues who have to deal with the quickie-refund bunch.   

 

[RitaB]

I wish the 1/31 was 2/15 and I don't care how far they move the 2/15.  There is always somebody who gives me an incorrect SSN.  If not, I can screw that up all by myself.  I hate that we won't have February to fix those things.

[FDNY]

This is going to screw up a lot of people's Valentine's Day gift planning.   Many guys (and gals) going to be in deep ship. 

[schirallicpa]

the Jan 31 deadline stinks.  we don't even do many payrolls, but it's always a cumbersome task to upload to the SS office, and it never fails - the program doesn't like my browser and I have to download firefox.  just don't like the task and have never been ready for W2's any moment earlier than they day they are due.  

So what's the penalty when everyone misses the deadline?

And while I'm at it, let me ask this question - how late can you file 1099s??

[Lynn EA USTCP in Louisiana]

1 hour ago, schirallicpa said:

And while I'm at it, let me ask this question - how late can you file 1099s??

From what I've read re the 1099 deadline, if the 1099 is for box 7, nonemployee compensation then it has a 1/31 deadline.  If it is for any other box, then the deadline to the IRS is delayed to February 28, 2017 (paper) or March 31, 2017 (electronic).

[Medlin Software, Dennis]

Wasn't the idea for this at least in part a reaction to the increasing number of fraudulent returns being filed?  There were several states who started moving up deadlines, now the IRS/SSA has joined in.. Change is never easy, but this is probably a good for all concerned.  Might reduce the number of rejected efile's, as well as cut down some fraud.  Maybe states will not have to turn off/delay tax processing this year because of high fraud concerns.  To me, this is a reasonable change, as it just makes sense the employer report, submitted under penalty of perjury, should be in hand before the return (and possible refund) is processed.

Yep, I have sent at least two reminders to our customers, and will probably send a couple more before Jan 31 - change is never easy.

 

Penalty?  The penalties were increased (according to the W2 instructions).

 

Failure to file correct information returns by the due
date. If you fail to file a correct Form W-2 by the due date
and cannot show reasonable cause, you may be subject
to a penalty as provided under section 6721. The penalty
applies if you:
Fail to file timely,
Fail to include all information required to be shown on
Form W-2,
Include incorrect information on Form W-2,
File on paper forms when you are required to e-file,
Report an incorrect TIN,
Fail to report a TIN, or
Fail to file paper Forms W-2 that are machine readable.
The amount of the penalty is based on when you file
the correct Form W-2. Penalties are indexed for inflation.
The penalty amounts shown below apply for tax years
beginning in 2016. The penalty is:
$50 per Form W-2 if you correctly file within 30 days of
the due date (for example, by February 28 if the due date
is January 31); the maximum penalty is $532,000 per year
($186,000 for small businesses, defined in Small
businesses).
$100 per Form W-2 if you correctly file more than 30
days after the due date but by August 1; the maximum
penalty is $1,596,500 per year ($532,000 for small
businesses).
$260 per Form W-2 if you file after August 1, do not file
corrections, or do not file required Forms W-2; the
maximum penalty is $3,193,000 per year ($1,064,000 for
small businesses).
If you do not file corrections and you do not meet
any of the exceptions to the penalty, the penalty
is $260 per information return. The maximum
penalty is $3,193,000 per year ($1,064,000 for small
businesses).
Exceptions to the penalty. The following are
exceptions to the failure to file correct information returns
penalty.
CAUTION
!
CAUTION
!
1. The penalty will not apply to any failure that you can
show was due to reasonable cause and not to willful
neglect. In general, you must be able to show that your
failure was due to an event beyond your control or due to
significant mitigating factors. You also must be able to
show that you acted in a responsible manner and took
steps to avoid the failure.
2. An inconsequential error or omission is not
considered a failure to include correct information. An
inconsequential error or omission does not prevent or
hinder the SSA/IRS from processing the Form W-2, from
correlating the information required to be shown on the
form with the information shown on the payee's tax return,
or from otherwise putting the form to its intended use.
Errors and omissions that are never inconsequential are
those relating to:
A TIN,
A payee's surname, and
Any money amounts.
3. De minimis rule for corrections. Even though you
cannot show reasonable cause, the penalty for failure to
file correct Forms W-2 will not apply to a certain number of
returns if you:
Filed those Forms W-2 on or before the required filing
date,
Either failed to include all of the information required on
the form or included incorrect information, and
Filed corrections of these forms by August 1.
If you meet all of the de minimis rule conditions, the
penalty for filing incorrect information returns (including
Form W-2) will not apply to the greater of 10 information
returns (including Form W-2) or one-half of 1% of the total
number of information returns (including Form W-2) that
you are required to file for the calendar year.
4. Forms W-2 with incorrect dollar amounts may fall
under a safe harbor for certain de minimis errors. The safe
harbor applies if no single amount in error differs from the
correct amount by more than $100 and no single amount
reported for tax withheld differs from the correct amount
by more than $25.
If the safe harbor applies, you will not have to correct
the Form W-2 and it will be treated as having been filed
with all of the correct required information. However, the
safe harbor does not apply if the payee elects to have you
issue a corrected return.
Small businesses. For purposes of the lower
maximum penalties shown in Failure to file correct
information returns by the due date, you are a small
business if your average annual gross receipts for the 3
most recent tax years (or for the period that you were in
existence, if shorter) ending before the calendar year in
which the Forms W-2 were due are $5 million or less.
Intentional disregard of filing requirements. If any
failure to timely file a correct Form W-2 is due to
intentional disregard of the filing or correct information
requirements, the penalty is at least $530 per Form W-2
with no maximum penal
 

[BLACK BART]

13 hours ago, RitaB said:

I wish the 1/31 was 2/15 and I don't care how far they move the 2/15.  There is always somebody who gives me an incorrect SSN.  If not, I can screw that up all by myself.  I hate that we won't have February to fix those things.

Ain't it the truth.  I'm really going to miss that 2-28 fix-foul-ups time. 

Sometimes I just give employee copies to the client before 1-31 and keep the red ones myself for error corrections and 2-28 mailing (lots of folks disregard the possibly heavy fines).  It's usually all you can do to even get clients' info by 1-31.  This may help on ID theft, but I'm pretty sure IRS will appreciate the cash windfall from late filing.  I can hear the penalized clients now: "Why didn't you.....?")

[Abby Normal]

If we want the IRS to compare early filed returns to the W2s, then we need the earlier filing date. If payroll is computerized, there's no reason we can't start processing W2s after the final payroll in December.

[Jack from Ohio]

19 minutes ago, Abby Normal said:

If we want the IRS to compare early filed returns to the W2s, then we need the earlier filing date. If payroll is computerized, there's no reason we can't start processing W2s after the final payroll in December.

Agree.  It is 2016.  Companies must come up to speed with 21st century technology and business protocols.  This will mean that huge numbers of companies will need to hire competent and experienced bookkeepers.  When the IRS fines start rolling in, there will be incentives for such a change.

[Catherine]

I start 1099's and W-2's for my payroll clients on January 2nd (or first business day of the new year).  Then e-file them all the last week (time for corrections of any address changes etc., before e-filing).  1099's later in January are for the onesie-twosie folks who still hand-write checks.

Then in November or December, I do the prior-year 1099's for the contractor who *always* runs a full year late.... (Yes, I have an email and paper trail asking for the information over and over and warning him of the penalties he will be hit with.)  

As long as records are electronic, there is no reason to delay these past mid-month.  Even for a large company.  The key, as Jack noted, is to have COMPETENT people in the accounting department!

[BLACK BART]

 

1 hour ago, Abby Normal said:

If we want the IRS to compare early filed returns to the W2s, then we need the earlier filing date. If payroll is computerized, there's no reason we can't start processing W2s after the final payroll in December.

 

56 minutes ago, Jack from Ohio said:

Agree.  It is 2016.  Companies must come up to speed with 21st century technology and business protocols.  This will mean that huge numbers of companies will need to hire competent and experienced bookkeepers.  When the IRS fines start rolling in, there will be incentives for such a change.

All good arguments and probably everyone here agrees these things should be done. But most clients? I'm not optimistic. 

[RitaB]

18 hours ago, BLACK BART said:

 

All good arguments and probably everyone here agrees these things should be done. But most clients? I'm not optimistic. 

Yeah, I'm not worried about the payrolls in my computer. 

I do worry, however, Mr. Black Bart, that you are missing personal messages, and that's a shame.