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Forms W-2 & 1099-MISC No Longer Approve Extensions Automatically

Aug 10, 2018 10:53:55 AM

Similar to many other official Forms, the International Revenue Service (IRS) has policies and procedures in place in relation to requesting extensions on when said Forms can be filed. August 1, 2018 had the IRS release Treasury Decision (TD) 9838, “Extension of Time to File Certain Information Returns,” which offered clarification that extension requests for Forms W-2 and 1099-MISC would not be automatically approved. Instead, “Filing extension requests must meet specified criteria and be requested on the appropriate IRS form by the filing deadline (i.e., January 31). Requests for extensions of the filing deadline have no effect on the deadline to furnish forms to recipients.”

Previously, extension requests for Forms W-2 and 1099-MISC were, generally, automatically approved. However, on August 13, 2015 temporary regulations TD 9730 (80 FR 48433)) were published that removed the automatic 30-day time extension for Forms W-2 and instead provided a single, non-automatic 30-day time extension.

Before The Protecting Americans from Tax Hikes Act of 2015 (PATH Act), P.L. 114-113 enacted in 2015, any Forms in the W-2 series were due by the last day of February, or March 31 if they were filed electronically. The PATH Act made it mandatory to file those forms by January 31st, either physically or electronically. As we mentioned in a previous blog, there are potentially expensive penalties if an employer fails to file these forms by their due date; up to $270 per Form W-2. These can occur if an employer fails to file timely; fails to include all information required on the Form; includes incorrect information on the Forms; or files on paper when a Form is required to be filed electronically. (You can check out our previous blog on IRS Form penalties HERE).

The IRS and Treasury explain that the reason for removing automatic filing of these Forms is primary due to wanting to avoid Identify theft and refund fraud. They say, “Identity theft and refund fraud are persistent and evolving threats to the nation’s tax system. They place an enormous burden on the tax system and taxpayers. Identity thieves and unscrupulous preparers often claim refunds by electronically filing fraudulent tax returns early in the tax filing season.” The IRS is also doing away with older practices when filing in order to eliminate uncertainty when granting extensions, namely that a written explanation was required stating why an extension was needed. Due to the non-specific user input and writing styles, it was often very difficult to quickly review these explanations and file them accordingly. The 2019 filing season will have a revised Form 8809 that will provide checkboxes to show the reason an employer is asking for an extension. They are as follows:

  • The business suffered a catastrophic event in a Federally Declared Disaster Area that made the business unable to resume operations or made necessary records unavailable;
  • Fire, casualty or natural disaster affected the operation of the business;
  • Death, serious illness, or unavoidable absence of the individual responsible for filing the Information Returns affected the operation of the business;
  • The Information Return is being filed for the first year the business was established; or
  • The filer did not receive timely data on a third-party payee statement (such as statement of sick pay).

Employers will be required to submit Form 8809 on, or before, the due date of the Information Return with the stipulation that only one 30-day extension may be requested at a time.

Though several Forms in the W-2 and 1099-MISC series will no longer be able to be filed automatically, there are still many that will be eligible for automatic filing extensions. They include:

  • Form W-2G “Certain Gambling Winnings”
  • Form 1042-S “Foreign Person's U.S. Source Income Subject to Withholding”
  • Form 1094-C “Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns”
  • Form 1095-B “Health Coverage”
  • Form 1095-C “Employer-Provided Health Insurance Offer and Coverage”
  • Form 3921 “Exercise of an Incentive Stock Option Under Section 422(b)”
  • Form 3922 “Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c)”
  • Form 8027 “Employer's Annual Information Return of Tip Income and Allocated Tips”
  • Form 1097 series
  • Form 1098 series
  • Form 1099 series (except forms reporting nonemployee compensation)
  • Form 5498 series

This regulation fully went into effect August 3, 2018 and applies to any requests for filing time extensions due after December 31, 2018.

 

If you would like a more detailed look into this new rule enacted by the IRS and Treasury, you can read it yourself HERE.

 

 

 

 

 

Bibliography

ADP Research Institute. (2018, August 8). Filing Extensions for Forms W-2 and 1099-MISC Are NOT Automatic. Retrieved from ADP Research Institute: https://www.adp.com/tools-and-resources/adp-research-institute/insights/insight-item-detail.aspx?id=4A89FC21-196E-485F-BD11-99A783C0175A

Internal Revenue Service, Treasury. (2018, August 3). Extension of Time To File Certain Information Returns. Retrieved from Federal Register: https://www.federalregister.gov/documents/2018/08/03/2018-16717/extension-of-time-to-file-certain-information-returns

 

 

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