GBACO blog post "Tax Filing Requirements | Changes made to reduce tax fraud"

Tax Filing Requirements | Changes made to reduce tax fraud

Posted by Derek M. Backa, CPA, CVA on Jan 16, 2017 2:51:00 PM
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Changes for the Tax Filing Requirements of information returns, Forms W-2, 1099 

In the past, forms W-2 and 1099 had to be mailed to the recipients by January 31st and mailed to the Social Security Administration (for W-2's) or IRS (for 1099's) by the last day of February.

Starting in 2017, forms W-2 and 1099 must be mailed by January 31st to both the recipients and the Social Security Administration (for W-2's) or the IRS (for 1099's). Companies that fail to mail these forms on time will be subject to penalties.

This change has been made in an effort to combat the increase in tax fraud. In previous years, fraudulent tax returns have been filed using legitimate Social Security Numbers. The IRS has been unknowingly issuing refunds based upon the information on these bogus returns. When the legitimate taxpayer then files their return, they receive a notice stating a return had already been filed. This is a nightmare for the individual taxpayer.

When a fraudulent return has been filed, the legitimate taxpayer then needs to:

  • file special forms with the IRS,
  • check their credit with the credit bureaus, etc.

This change will give the IRS additional time to match the amounts reported on the individual tax returns against the amounts reported on filed W-2’s and 1099’s. However, the IRS stated that individuals should expect delays in receiving refunds, especially those individuals that file their returns in January.

This should not be a large burden on most businesses since the forms were already required to be prepared by the end of January for the recipients. Although refunds will take longer to receive, it should help to relieve some of the tax fraud being perpetrated on the businesses' employees, and vendors.

Changes Made for the Tax Filing Requirements for 1065s (partnership tax returns).

The filing deadline for form 1065 (Partnership Tax Return) has also been changed.

The due date of the return has been changed from April 15th to March 15th. The original due date of April 15th was the same due date as individual tax returns (form 1040). Many taxpayers needed the partnership K-1’s to file their individual tax returns, so having the same deadline for both returns did not make sense.

This change will most likely cause many partnerships and LLC’s filing as partnerships to close the books earlier or be extended. This added burden on partnership filers should help individual filers in filing their returns in a timely fashion.

Corporate Return Changes:

Both corporate returns, (forms 1120 and 1120s), have been due on March 15th.  However, while the S-Corporation Tax Return, form 1120s, (which generate a form K-1 for the shareholders) is still due on March 15th, the filing requirement for regular corporations, form 1120, has been changed to April 15th. 

Recap of the Changes:

  • W-2’s are to be mailed to both the recipients and the Social Security Administration by January 31st.
  • 1099’s are to be mailed to both the recipients and the IRS by January 31st.
  • The filing deadline for form 1065 (Partnership Tax Return) has been changed to March 15th.
  • The filing deadline for corporate returns (form 1120) has been changed from March 15th to April 15th. 

Other Useful IRS Links:

A Point of Clarification:

According to Public Law 114-113, Division Q, section 201; 

When you are reporting nonemployee compensation payments in box 7 of Form 1099-MISC, it must be filed on or before January 31, 2017.

Income reported in the other boxes of form 1099-MISC can still be filed with the IRS by February 28, 2017 if you file on paper, or by March 31, 2017 if you file electronically.

Topics: Tax Filing Requirements, Tax Filing Requirement Changes, Tax Fraud

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