The Bottom Line: Tips for Proper Reporting
Here's what you need to know about legislation changes, tax filing deadlines and IRS enforcement updates that were implemented in 2015.
Last year, the Protecting Americans from Tax Hikes Act of 2015 (PATH) changed the filing due dates for Form W-2 returns that are to be filed after December 31, 2016. In addition, the Trade Preference Extension Act of 2015 (TPE) increased the penalties for returns filed after December 31, 2015, and the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 modified various tax return due dates and extension periods applicable for tax returns filed after December 31, 2015. Here is a breakdown of what you need to know for each of these legislation changes, tax filing deadlines and IRS enforcement updates.
Form W-2. Form W-2 is used by mold builders and other employers to report remuneration, including noncash payments, for services performed by an employee during the calendar year. It is important to note that Form W-2 is required to be filed even if the payment is less than $600, if any income, Social Security or Medicare tax is withheld.
New filing deadline for Form W-2 with the SSA. Prior to the PATH Act, the deadline for filing Form W-2 with the Social Security Administration (SSA) using paper forms was the last day of February following the calendar year for which the filing was made. The deadline for companies that file the forms electronically was the last day of March. Under the PATH Act, the new filing deadline is January 31, regardless of whether the forms are filed on paper or electronically. The due date for providing wage statements to employees and written statements to employees receiving non-employee compensation has remained the same as under pre-2015 Path Act law, January 31.
Increased penalties. A penalty applies to companies that fail to file on time, fail to include all required information or include incorrect information on the returns. The TPE Act increased the penalties for returns filed after December 31, 2015. The amount of the penalties is based on when the returns with correct information are filed. Changes to the penalty amount include the following:
• The base penalty increased from $100 to $260 for each information return that is not filed at all or is not filed correctly by August 1.
• The penalty amount for corrections made within 30 days increased from $30 to $50.
• The penalty amount for corrections made by August 1 increased from $60 to $100.
• The penalty amount for intentional disregard is now the greater of $530 or 10 percent of the aggregate dollar amount of the items required to be reported correctly on the return.
Penalty exceptions. In general, the penalties will not apply to any failure that the filer can show was due to reasonable cause and not willful neglect. In addition, any Form W-2 with incorrect dollar amounts may not be subject to penalties, as long as the errors are minor and the return was filed on time and was corrected by August 1.
Companies that are required to e-file, but fail to do so, may also incur a penalty. Tool shops who submit less than 250 information returns can file returns using paper forms, but payers who submit 250 or more information returns must file electronically. Generally, mold builders’ information returns include W-2 and 1099s.
Revised dates for Form 1065, Form 1120, Form 1041, FinCEN 114 and Form 1120S. The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 modified various tax return due dates and extension periods applicable for tax returns beginning after December 31, 2015. The changes are intended to help individuals file timely and accurate tax returns. Under the previous due dates, individuals often had insufficient time to prepare returns, because information required from a flow-through entity such as a S corporation, partnership or limited liability company (LLC) was not available before the income tax return was due. The original and extended due dates for 2016-calendar-year filers have been summarized in the chart below, with revised due dates in orange.