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Final regulations have been issued by the IRS that will no longer allow employers to receive an automatic extension of time to file information returns on forms in the W-2 series (except Form W-2G), beginning with 2016 W-2 forms filed in 2017. The regulations allow only a single 30-day non-automatic extension of time to file these information returns. This change is being made to help combat identity theft and income tax fraud.
Basics on W-2 Forms
There are two deadlines for filing W-2 Forms:
- Paper filing. W-2 forms that are filed on paper must be filed with the Social Security Administration by the last day of February of the calendar year following the calendar year for which the information is being reported.
- Electronic filing. The due date for filing W-2 forms electronically is March 31 of the calendar year following the calendar year for which the information is being reported.
IRS regulations currently provide an automatic 30-day extension of time to file information returns on W-2 series forms, and an additional 30-day non-automatic extension of time to file these information returns in certain cases. These regulations will remain in effect for 2015 W-2 forms filed in 2016.
Under the new regulations, employers will only be allowed one non-automatic extension rather than the automatic extensions now allowed. Since the new regs are scheduled to become effective in 2017, the automatic extension is still available in 2016.
Why the Rules Are Changing
Currently, the deadline for filing paper W-2 forms may be extended until the end of March or, if a non-automatic extension is also granted, until the end of April. W-2 forms filed electronically may be extended until the end of April or, if a non-automatic extension is also granted, until the end of May.
In many cases, the IRS is unable to verify the wage and other data reported on income tax returns filed before April 15th, in part because the IRS doesn’t receive the information returns reporting this data until later in the filing season.
Identity thieves often electronically file fraudulent refund claims early in the tax filing season, using fictitious wages and data from legitimate taxpayers. By not allowing extensions, information returns will be made “available earlier in the filing season for use in the IRS’s identity theft and refund fraud detection processes,” the new regulations state. If the IRS can identify fraudulent refund claims, it can stop the refunds before they’re paid.
“Identity theft and refund fraud is a persistent and evolving threat to the nation’s tax system. It places an enormous burden on the United States Government, with the most painful and immediate impact being on the victims whose personal information is used to commit the crime and the most pervasive impact being an erosion of public confidence in the tax system.” — Treasury Department in new regulations |
Non-Automatic Extensions
The IRS anticipates that it will grant the non-automatic extension of time to file only in limited cases. This will occur only when the filer’s or transmitter’s explanation on Form 8809, “Application for Extension of Time To File Information Returns,” demonstrates that an extension of time to file is needed as a result of extraordinary circumstances or catastrophe. An example might be a natural disaster or fire destroying the books and records that a filer needs to submit the information returns.
If the IRS doesn’t grant the extension of time to file, information returns filed after the due date will not be considered timely filed, regardless of whether the application for extension of time to file was filed timely.
Other Types of Information Returns
Proposed regulations would eventually remove the automatic 30-day extension of time to file other information returns, including forms in the 1099 series, Form 1042-S, Form 3921, Form 3922, and Form 8027. Instead, filers would be able to request a single non-automatic 30-day extension of time to file.
These rules would also apply to the following Affordable Care Act information returns:
- Form 1094-C, “Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns,”
- Form 1095-B, “Health Coverage,” and
- Form 1095-C, “Employer-Provided Health Insurance Offer and Coverage.”
The proposed regulations would not apply to Form 1095-A, Health Insurance Marketplace Statement.
The proposed regulations would affect information returns due January 1 of the calendar year beginning after the date of publication of final regulations in the federal register. The preamble to the proposed regulations states that the final regulations will not be effective any earlier than the 2018 filing season.
If you have questions about filing W-2 forms or other information returns, consult with your payroll tax adviser.