In a climate where identity theft is becoming ever-present, part of the PATH (protection against tax hikes) Act of 2015 attempts to combat fraud by revising filing deadlines and methods for W-2’s and 1099’s. This allows the IRS to verify information by the issuer prior to awarding tax refunds.
Certain 2016 forms have adjusted due dates, including W-2’s and 1099’s. W-2’s will need to be electronically filed with the IRS and issued to recipients no later than January 31, 2017. Previously, these could be filed with the IRS as late as March 31.
1099’s with amounts reported in box 7 (nonemployee compensation) are also required to be electronically filed with the IRS and issued to the recipient no later than January 31, 2017. 1099’s with amounts reported in boxes other than box 7 such as rent, royalties or other income can be filed as late as March 31 if filing electronically.
Consequences for noncompliance are steep. Penalties vary, depending on timing and type of noncompliance, and can be up to $500 per form. This can quickly add up, so be sure to take action immediately, if applicable.
Overtime Rule Update
During the summer of 2016, the announcement was made that certain workers were eligible for overtime pay beginning December 1, 2016. We received many questions on this topic as December approached as many small business owners are affected by this rule. In late November, US District Judge Amos Mazzant, in Sherman, Texas agreed with 21 states and a coalition of business groups, including the US Chamber of Commerce and blocked the overtime mandate. This essentially put the implementation of these rules on hold.
Current Tax Environment Update
As a result of the recent election, we’ve seen an influx of phone calls regarding the impact of the incoming administration to their individual income tax situation. Many wonder when the sweeping tax reforms President Elect Trump campaigned on will take effect, specifically repealing the Affordable Care Act.
We have some ideas on what will happen, but it will take some time for policy changes to be made. We encourage taxpayers to stay connected to keep abreast with changes.
Please reach out to your accountant at Cook Martin Poulson, PC with any questions you may have on the applicability of this information to your individual situation.