The old adage “close only counts in horseshoes” is an accurate reflection of the new IRS information reporting rules. Beginning with 2016 returns, due dates for Forms W-2 and certain Forms 1099 have been moved up, and the penalties for late or inaccurate forms have substantially increased.
Here are the new filing deadlines for 2016 tax returns:
- Form W-2 is due to the Social Security Administration on January 31, 2017, instead of February 28, whether you file electronically or by paper. (If you file 250 or more forms, you must file electronically.)
- Form 1099 must be submitted by January 31 if you’re reporting non-employee compensation in Box 7. Otherwise, the forms are due to the IRS on February 28, the same as in prior years, or March 31 if you file electronically.
In addition to making sure you file on time, you also need to make sure the forms are accurate. Penalties can be assessed for missing or wrong social security numbers, incorrect amounts, filing on paper when electronic forms are required, and failure to provide a copy of the return to the payee.
How much are the penalties? If you fail to file by the required due date and your business has gross receipts of more than $5 million, penalties can range from $50 per return for being as much as 30 days late, to $260 per return for filing after August 1. The maximum dollar penalty can range from $532,000 to $3,193,000. If the IRS says you intentionally disregarded the rules, you can be fined $530 per return, with no maximum.
When your receipts are $5 million or less, the same per-return fines apply, but maximum penalties range from $186,000 to $1,064,000.
Information reporting requirements are no game. Contact the Cisco & Co office for assistance.