“In this world nothing can be said to be certain, except death and taxes.”
While Benjamin Franklin’s words still hold true today, taxes will undergo a few changes this year. These tax changes will ultimately add to the responsibilities of employers and require quick action to avoid penalties come tax time.
Accelerated Filing Date
New legislation requires employers to file W2 and 1099 forms to the Social Security Administration (SSA) by Jan 31, 2017, whether they will be filing paper or electronic copies. However, some states are setting later deadlines for employer tax form submissions.
So, when should a business send out their state W2 and 1099 forms? Well, it depends. Employers must reconcile (file annual returns and state copies of their tax forms) based on their state’s requirements.
- Employers Must Reconcile by Jan 31.
Alabama, Colorado, Connecticut, Delaware, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia and Wisconsin as well as the District of Columbia and Puerto Rico
- Employers Must Reconcile by Feb 1.
- Employers Must Reconcile by Feb 28.
Arizona, Arkansas, Hawaii, Kansas, Maine, Michigan, Missouri, Montana, New Jersey, Oklahoma and West Virginia
Additionally, in 2017, annual filing of state W2 forms are required by employers in Iowa and Oklahoma —a change for employers in these states.
If you plan to request an extension with the SSA (Form 8809), it must be filed before Jan 31. Employers are only allowed one 30-day extension.
These changes only impact employers’ release of tax forms to state officials. Taxpayers have an April 18 filing deadline, as opposed to April 15.
This year, the IRS will hold tax refunds until after Feb 15 for taxpayers who claim the Earned Income Tax Credit or the Additional Child Tax Credit. This congressionally-approved change aims to thwart refund fraud and identity theft by allowing the IRS more time to scrutinize suspicious tax filings.
In 2013, the IRS estimated that 24 percent of all Earned Income Tax Credit payments, a tax credit for low to moderate income households, were mistakenly paid due to error, fraud or identity theft.
This change will impact tens of millions of Americans but could save the U.S. billions in the long-term. (The IRS paid $5.8 billion to identity thieves in 2014 alone; delaying refunds will help reduce this figure.)
Inform your team about the possible refund delay to avoid undue stress or poor financial planning — both of which could easily result in a loss of productivity. Use the IRS’ tracker Where’s My Refund? to find out when your refund will arrive.
Extended ACA Reporting Deadline
This will be the second year many employers find themselves navigating Affordable Care Act (ACA) forms come tax time. While the IRS has extended these filing deadlines, more organizations will be required to participate than in the previous year.
These forms (1095-B and 1095-C) must be delivered to employees and filed with the IRS to prove a business offered “affordable” health coverage to its employees. The forms also confirm with the IRS that individuals have health insurance and are not liable for tax penalties.
The IRS will request payroll and benefits data to ensure form accuracy and determine if the business is liable under the ACA’s shared responsibilities provisions.
This year, the provisions state that businesses with 50 or more full-time employees must have offered 95 percent of their employees “affordable” health coverage. If at least one of their full-time employees receives a premium tax credit for purchasing individual coverage on a Health Insurance Marketplace, the employer must make an “employer shared responsibility payment” to the IRS to avoid penalties.
Forms 1095-B and 1095-C are due to employees by Jan 31. These forms must also be sent to the IRS by Feb 28 if filing on paper or by March 31 if electronically filed.
Employers who file 250 or more information returns during the calendar year must file these returns electronically.
Increased Security Concerns
While the other tax changes may seem like a real curve ball, they’re far less concerning than the risks every employer should come to expect during tax season. Phishing scams, data breaches and physical theft of employee or customer information should be on your radar, especially as you near your filing dates.
When tax season rolls around, identity thieves might as well be kids in a candy store. They know how easy it is to fraudulently file a tax return in someone else’s name or commit medical identity theft using a snatched ACA form. Moreover, they know how much of that data is kept in under-secured businesses.
Identity thieves searching for personal information will likely increase as April 18 approaches and they’ll undoubtedly turn to a variety of scam tactics to swindle information from employers.
Protect your business by educating employees on phishing scams, installing and maintaining cybersecurity controls, keeping confidential information physically secure and enacting strict security standards.
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