The year 2017 may seem like a long time from now, but it will be here before you know it. There are some important changes impacting businesses required to file certain information returns. The sooner you gear up for this tax responsibility, the easier your filing responsibilities will be.
Changes to Information Returns
If you have employees, as always you must provide them with their Form W-2 by the end of January. What’s new is that you must also transmit copies, along with Form W-3, to the Social Security Administration by the same date, January 31, 2017. In the past, the transmittals were not due until the end of February if sending paper forms or by the end of March if transmitting forms electronically. The change was made to enable the IRS to more readily match information in order to thwart fraudulent tax refund claims. Find more details in the instructions to the W-2 and W-3.
If you use independent contractors, there is a change for you this year. The same dates for furnishing forms to workers and transmitting them to the government apply to Form 1099-MISC, with some variation. If you complete Box 7 on Form 1099-MISC, which is used for reporting non-employee compensation (referred to in government shorthand as 1099-MISC NEC), then you must follow the W-2 dates described earlier for submission. The only difference: Instead of transmitting forms to the Social Security Administration, transmittals of 1099-MISC, along with Form 1096, are sent to the IRS.
If your business completes Form 1099-MISC to report other types of income, such as rents or royalties, the old deadlines (February 28, 2017, for paper returns, and March 31, 2017, for transmitting forms electronically) for transmission continue to apply. Find more details in the instructions to Form 1099-MISC.
Forms 1095-B and 1095-C
If you are an applicable large employer, or ALE (50 or more full-time and full-time equivalent employees) in 2016, you must provide employees with Form 1095-C by January 31, 2017. Last year this due date had been extended to the end of March because it was the first year this information return is required.
An ALE must furnish employees with the form, even if the company had opted not to offer health coverage and pay the tax penalty under the Affordable Care Act’s employer mandate.
Even if you are not an ALE, you must complete Form 1095-B if you have a self-insured plan, such as a health reimbursement arrangement. If you are not an ALE and only have insurance coverage, then the insurer sends employees the form.
The transmittal dates for copies of the 1095s, along with Form 1094-B or Form 1094-C, are also new. Last year, employers had until the end of May to send paper copies to the IRS or transmit them electronically by the end of June. This year, the due dates are the same as for most other information returns: February 28, 2017, for paper returns; March 31, 2017, for electronic filing. Find more details in the instructions to these forms and transmittals.
There are no extensions for providing workers with their information returns. However, if you need more time to transmit information returns to the government, you’ll have to ask the IRS. This is done on Form 8809, which has been revised for use in the 2017 filing season.
Generally, you can obtain an automatic 30-day extension. If you need even more time, there are no additional automatic extensions so you’ll have to make a special request. The request is made by submitting a second Form 8809 with an explanation of the extenuating circumstances that prevented you from filing by the due date.
There is no automatic extension for W-2s. There is only a possible 30-day non-automatic extension. It will be granted only under extraordinary circumstances or catastrophe, such as a natural disaster or fire destroying the employer’s books and records.
The amount of penalties you may owe for filing late or incorrect information returns depends on when you fix the problem. The penalty is assessed per form, and there is a maximum penalty.
- If you correct the problem on or before 30 days after the required date: $50 per form
- If you correct the problem after the 30th day but no later than August 1: $100 per form
- If you correct the problem after August 1: $260 per form
While these basic penalty amounts are unchanged amounts that applied last year, the caps on penalties have been adjusted for inflation. Note that small businesses, which are those with average annual gross receipts for the three prior years of $5 million or less, have a smaller penalty cap than larger companies.
Get ready now for the 2017 filing season, which is just around the corner. Make sure you know who’s responsible for filing your information returns: in house, a payroll company, your CPA, etc. Keep in mind that a company filing 250 or more information returns — W-2s, 1095, 1099s — during the year must transmit information returns electronically.
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