Starting in 2017, 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 January 31. The new January 31 filing deadline also applies to Forms 1099-MISC reporting non-employee compensation, such as payments to independent contractors. For similar reasons, the new law also requires the IRS to hold refunds involving two key refundable tax credits until at least February 15. Here are details on each of these key dates.

New January 31 Deadline for Employers

The Protecting Americans from Tax Hikes (PATH) Act, enacted in December 2015, requires employers to file their copies of Form W-2 with the Social Security Administration by January 31. Businesses are also required to file Forms 1099-MISC showing nonemployee compensation with the Internal Revenue Service by January 31.

In the past, businesses and other 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 the rules regarding requesting an extension to file Form W-2. Only one 30-day extension 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 no later than January 31. Please carefully review the instructions for Form 8809, and call our office, if you need more information.

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 avoid issuing refunds to taxpayers not eligible to receive them. In some instances, this may enable the IRS to release tax refunds more quickly than in the past.

The January 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 February 15

Due to another PATH Act change, some people will be getting their refunds later than they have in the past. 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 February 15.

Furthermore, 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 they are claiming the EITC or ACTC or not, taxpayers should not count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations. Typically, the IRS issues more than nine out ten refunds in less than 21 days; however, some returns may be held for further review.

Please call us, if you have any questions about the earlier filing deadlines for Forms W-2 or 1099-MISC.

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