A new federal law, aimed at making it easier for the IRS to detect and prevent refund fraud will accelerate the W-2 filing deadline for employers to Jan. 31.
For similar reasons, the new law also requires the IRS to hold refunds involving two key refundable tax credits until at least Feb. 15.
The Protecting Americans from Tax Hikes Act, enacted last December, requires employers to file their copies of Form W-2, submitted to the Social Security Administration, by Jan. 31.
The new Jan. 31 filing deadline also applies to certain Forms 1099-MISC reporting non-employee compensation such as payments to independent contractors.
In the past, employers typically had until the end of February, if filing on paper, or the end of March, if filing electronically, to submit their copies of these forms.
In addition, there are changes in requesting an extension to file the Form W-2.
Only one 30-day extension to file Form W-2 is available, and this extension is not automatic. If an extension is necessary, a Form 8809 Application for Extension of Time to File Information Returns must be completed as soon as you know an extension is necessary, but by January 31.
Only one 30-day extension to file Form W-2 is available, and this extension is not automatic.
"As tax season approaches, the IRS wants to be sure employers, especially smaller businesses, are aware of these new deadlines," says IRS Commissioner John Koskinen.
"We are working with the payroll community and other partners to share this information widely."
The new accelerated deadline will help the IRS improve its efforts to spot errors on returns filed by taxpayers.
Having these W-2s and 1099s earlier will also make it easier for the IRS to verify the legitimacy of tax returns and properly issue refunds to taxpayers eligible to receive them.
The Jan. 31 deadline has long applied to employers furnishing copies of these forms to their employees and that date remains unchanged.
Some Refunds Delayed
Due to the PATH Act change, some taxpayers will get their refunds a little later.
The new law requires the IRS to hold the refund for any tax return claiming either the Earned Income Tax Credit or Additional Child Tax Credit until Feb. 15.
By law, the IRS must hold the entire refund, not just the portion related to the EITC or ACTC.
Even with this change, taxpayers should file their returns as they normally do. Whether or not claiming the EITC or ACTC, the IRS cautions taxpayers not to count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations.
Though the IRS issues more than nine out 10 refunds in less than 21 days, some returns are held for further review.