Historically, employers have had to manage two filing deadlines for their Forms W-2, Forms W-3 (Wage and Tax Statements), and Forms 1099-MISC. The first deadline was January 31st, whereby these forms were due to the respective recipients. A second deadline of March 31st also had to be managed. This was when these forms were due to the Social Security Administration. Beginning in 2017, recipient copies and filing copies are both due January 31st, regardless of whether they are electronically filed or paper filed. It’s important to remember the new filing deadlines and ways to prepare yourself to ensure timely filing.
Under the new Protecting Americans from Tax Hikes (PATH) Act of 2015, aimed at making it easier for the IRS to detect and prevent refund fraud and identity theft, the IRS accelerated the federal filing deadline to match the recipient copy deadline and allow for additional time to verify the legitimacy of returns.
The gap between the due dates has traditionally made it difficult for the IRS to match up Forms W-2 and 1099 with tax returns filed earlier in the season. This time lag has resulted in an increase in fraudulent returns filed, refunds issued to fraudulent persons, and identity theft of the taxpayer.
How You Can Prepare
How can you better prepare for issuing your Forms 1099 and W-2 when you don’t use a third-party service provider? It is best to get organized early.
Maintain a vendor listing with each vendor’s current contact information. You are responsible for sending the recipient their Form 1099, so it is important that their address is current. The vendor listing should also include the vendor’s taxpayer identification number. As you begin a relationship with a vendor, have them complete Form W-9, Request for Taxpayer Identification Number, prior to payment. This will ensure you obtain proper reporting information prior to beginning your business relationship. Did you know this information can be collected and stored inside your company’s QuickBooks file for easy preparation and filing?
Double check and confirm the amounts paid with the vendors to ensure that the amounts to be reported on the forms are correct. Errors can easily be made when you use vendors that provide both services and products to your business.
Forms W-2 & W-3
As with your vendors, it is also important to have your employees’ correct mailing addresses and taxpayer identification numbers on file. Have your employees update a personal profile or complete a Form W-9. Compare the updated information to what you have in your system and implement any changes as noted.
Prior to preparing the tax forms, print a report detailing all of the payroll information, contact information, and taxpayer identification numbers and confirm its accuracy. If you note an error in a taxpayer identification number during this review process, you may need to file amended payroll reports.
Evaluate the number of W-2s you are issuing and determine whether paper filing or electronic filing is appropriate and/or required.
Understand the instructions for preparation of these forms. Form presentation and rules for reporting may have changed from previous years. It is important that you are aware of any changes early on so that you can prepare accordingly.
We Can Help
For additional information on your specific requirements or for assistance in preparing and filing the appropriate forms, please contact Kristi Yanover at Lindsay & Brownell, LLP.