IRS Tightens W-2 and 1099 Filing Deadlines

by Elizabeth Hostetler, CPA

With the start of a new year, employers and accountants need to be aware of changes to W-2 and certain 1099-MISC filing deadlines. The changes are part of The Protecting Americans from Tax Hikes (PATH) Act of 2015 passed by Congress in an effort to combat fraud and detect errors on tax returns.

What’s Changing in 2017?

In previous years, employers were required to remember the following dates when sending W-2s to employees and 1099s to independent contractors:

  • Provide payee copies before January 31st
  • Submit forms to the Social Security Administration by February 28th for paper filings and March 31st for e-filings

Beginning with the 2016 forms, both agency and employee copies of W-2s and 1099-MISC for independent contractors must be remitted by January 31, 2017. Electronic filers will no longer receive extended time for e-filing. The deadline only applies to filers of 1099-MISC reporting amounts in Box 7: Nonemployee Compensation. Any other 1099-MISC forms will still be allowed the February 28th deadline for submission to the IRS, and March 31st for e-filers.

With the stricter deadlines come increased penalties for late filings and non-filing. These penalties are calculated on a PER FORM basis, so be aware that they can accrue quickly. The penalty for filing up to 30 days late has increased from $30 to $50 per form. Filing from 31 days after the initial deadline through August 1st has doubled from $50 to $100. Forms submitted after August 1st or those containing incorrect or missing TINs will accrue up to a $260 penalty (previously $100). Deliberate disregard of filing requirements carries a $530 fine instead of the $250 previously enforced.

What Can You Do To Prepare and Avoid Penalties?

It will help both employers and accountants to be proactive in meeting these shorter deadlines. As the year has just recently come to a close, be sure all contractors and vendors who were paid more than $600 in 2016, have completed W-9s on file. Verify that employee information is up-to-date, including address and name changes, and that there are no missing taxpayer SSNs. It is especially important to review year-end totals for any discrepancies before submitting the information. Lastly, provide your accountant with employee year-end registers and vendor ledgers as soon as possible.

Be aware that fines will double if forms are not submitted to the payee and the IRS. Remember, if you don’t have amounts in Box 7 of your 1099-MISC, the due dates remain February 28th for paper filing and March 31st for electronic filing. Since you will be gathering independent contractor and vendor information to submit before January 31st, you should still strive to send any additional 1099-MISC information to your accountant simultaneously. It is highly encouraged to add the changes and recommendations listed above to your year-end closing checklist. By taking these precautionary measures, both employers and accountants will save time and money going into future years.