As part of the Protecting Americans from Tax Hikes Act of 2015 (PATH), the deadline for filing Forms W-2, W-3, and Form 1099 MISC reporting nonemployee compensation will be accelerated to January 31st following the calendar year to which the returns relate. Note that this IRS deadline is one month earlier than in previous years and goes into effect with 2016 forms that will be filed in early 2017.
What You Need to Know:
- Forms W-2 and W-3: The due date for filing 2016 Forms W-2, W-2AS, W-2CM, W-2VI, W-3 and W-3SS with the Social Security Administration is now January 31, 2017, regardless of whether you file via paper (less than 250 information returns) or electronically.
An extension of 30 days can be requested using Form 8809 for the filing of Forms W-2 and 1099 MISC, but may only be granted if there are extenuating circumstances. Requests must be in writing and signed by the filer/transmitter, or a person who is duly authorized to sign a return, by filing Form 8809 Box 7 (Application for Extension of Time to File Information Returns) by the original due date of the information returns—either via paper on or through the IRS FIRE system.
- Form 1099-MISC: The due date of January 31, 2017 is applicable to payments that are considered “nonemployee compensation” and recorded in Box 7.
What is Nonemployee Compensation? Nonemployee compensation can be defined as the following: Payments in excess of $600 to any individual or partnership made in the course of your trade or business. These payments include compensation to attorneys, consultants, salespersons, etc.
Extensions for 1099-MISC must be requested by January 31, 2017 using Form 8809, but if you have additional Information returns that are due February 28th, we suggest you file only (one) Form 8809.
Be careful if you are submitting 1099 MISC with information in Box 7 and then other information on the Form 1099 with a different due date; be sure not to duplicate the filing.
The above list is not all inclusive. All other Form 1099 MISC for payments such as rent, royalties, and other income are due January 31st to the recipients and February 28th to the IRS if filed via paper (less than 250 information returns), and March 31st if filed electronically or if an extension is requested. As stated above, this DOES NOT apply the payments reflected in Box 7 of Form 1099 MISC.
Penalties: If you are NOT in compliance with the new filing dates there are significant penalties which have increased from the previous year.
- $50 per Form if you correctly file within 30 days (March 30th if due date is February 28th) of the due date. The maximum penalty is $532,000 per year ($186,000 for small businesses).
- $100 per Form if you correctly file more than 30 days after the due date but by August 1st, the maximum penalty is $1,596,500 per year ($532,000 for small businesses).
- $260 per Form if you file after August 1st, but do not file corrections, or do not file required Forms, the maximum penalty is $3,193,000 per year ($1,064,000 for small businesses).
- $530 per Form if the failure is due to intentional disregard with NO maximum penalty.
Small businesses are defined by the Internal Revenue Service as entities having average annual gross receipts for the 3 most recent tax years (or for the period you were in existence, if shorter) ending before the calendar year in which the information returns were due, of $5 million or less.
Should you have any questions concerning the above information please contact your Friedman LLP tax professional.