Recommended by: Jerry Beard
In the continuing efforts to reduce the payment of fraudulent refunds, the Internal Revenue Service and the state revenue agencies are requiring W-2 information be submitted by January 31. This means the W-2 information will be available to match with any return that is filed. Most of the fraudulent returns are filed early in the season with false W-2 data in hopes of receiving the refund before it can be determined the refund request to be bogus.
The following is from an article posted on the IRS website October 28, 2016:
Reminder: Employers Face New Jan. 31 W-2 Filing Deadline; Some Refunds Delayed Until Feb. 15
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.
New Jan. 31 Deadline for Employers
The Protecting Americans from Tax Hikes (PATH) Act, enacted last December, includes a new requirement for employers. They are now required to file their copies of Form W-2, submitted to the Social Security Administration, by Jan. 31. The new Jan. 31 filing deadline also applies to certain Forms 1099-MISC reporting non-employee compensation such as payments to independent contractors.
In the past, employers typically had until the end of February, if filing on paper, or the end of March, if filing electronically, to submit their copies of these forms. In addition, there are changes in requesting an extension to file the Form W-2. Only one 30-day extension to file Form W-2 is available and this extension is not automatic. If an extension is necessary, a Form 8809 Application for Extension of Time to File Information Returns must be completed as soon as you know an extension is necessary, but by January 31. Please carefully review the instructions for Form 8809, for more information.
“As tax season approaches, the IRS wants to be sure employers, especially smaller businesses, are aware of these new deadlines,” said IRS Commissioner John Koskinen. “We are working with the payroll community and other partners to share this information widely.”
The new accelerated deadline will help the IRS improve its efforts to spot errors on returns filed by taxpayers. Having these W-2s and 1099s earlier will make it easier for the IRS to verify the legitimacy of tax returns and properly issue refunds to taxpayers eligible to receive them. In many instances, this will enable the IRS to release tax refunds more quickly than in the past.
The Jan. 31 deadline has long applied to employers furnishing copies of these forms to their employees and that date remains unchanged.
Some Refunds Delayed Until at Least Feb. 15
Due to the PATH Act change, some people will get their refunds a little later. The new law requires the IRS to hold the refund for any tax return claiming either the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) until Feb. 15. By law, the IRS must hold the entire refund, not just the portion related to the EITC or ACTC.
Even with this change, taxpayers should file their returns as they normally do. Whether or not claiming the EITC or ACTC, the IRS cautions taxpayers not to count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations. Though the IRS issues more than nine out 10 refunds in less than 21 days, some returns are held for further review.
Jerry E. Beard, CPA, MST, is a Supervisor in the Tax Department of Ellin & Tucker. He has extensive hands-on experience providing tax compliance, planning, and consulting for a variety of clients with privately owned business operating in various industries and is also well versed in various tax services for trusts, estates and high net-worth individuals.