The 2017 tax filing season will be a challenging one for businesses and their CPAs. On top of the new Affordable Care Act (ACA) compliance requirements, the IRS has condensed its schedule and deadlines for filing W2s and certain types of 1099s for employees and independent contractors. These filing deadlines will now be moved up to January 31. Under the previous rules, deadlines for these filings were staggered. Employers have traditionally been required to send all W2s and 1099-MISC forms to recipients by January 31.
However, they were not required to submit these forms to the IRS or Social Security Administration (SSA) until a month or two later. In the case of paper forms, the previous deadline was February 28. For electronically-filed forms, the deadline was March 31.
Having an extra one to two months was often helpful for employers; allowing them to send W2s and 1099s to recipients, then wait to find out if any of the recipients reported mistakes on these forms, which could be corrected before sending them in to the appropriate federal agency. The compression of these deadlines not only puts employers in a time crunch, but it also leaves little room for errors.
There is some confusion regarding these new deadlines, because they do not apply to all 1099-MISC forms. The January 31 deadline is applicable to all W2 filings, and on top of that, the automatic 30-day extension that was previously available for W2s has also been eliminated.
For 1099s, the new deadline is only applicable to those in which the filer is reporting nonemployee compensation payments in Box 7. This means it will apply to the vast majority of 1099 filers, but not all of them. The 30-day extension has also been eliminated for the filing of applicable 1099-MISC forms. For those who do not have amounts to report in Box 7, the previous filing deadlines remain; February 28 for paper filings, and March 31 for electronic filings.
How are State Deadlines Impacted by the Federal Change?
Most of the states that require W2 filings have opted to move their deadlines up to January 31. So far, 13 states have decided to leave their deadlines the same. These include:
- Arizona
- Arkansas
- Kansas
- Maine
- Massachusetts
- Michigan
- Minnesota
Missouri - Montana
- New Jersey
- New Mexico
- Oklahoma
- West Virginia
Adapting to the New Deadlines
Because of the new W2 and 1099 filing deadlines, employers need to be well-prepared to complete these tasks before the end of the year. This means putting processes in place to effectively review year-end numbers for discrepancies, verify the accuracy of employee/subcontractor information, and be able to quickly make any necessary corrections before the looming January 31 deadline. If your organization has not yet taken steps to adapt to the new deadlines, it is best to speak with your CPA as soon as possible, so you can take measures now to ensure a smooth and successful tax filing season.