Tax

IRS Implements & Proposes Due Date Changes to Fight Fraud

August 2015
Author:  Shawn Loader

Shawn Loader

Senior Manager

Tax

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On August 12, 2015, the IRS issued temporary regulations ending the automatic extension option available for the W-2 form series in an attempt to curb identity theft. Identity thieves often attempt to intercept taxpayer refunds by filing fraudulent returns early in the season before the IRS receives W-2 information from employers to compare to the filed returns. Along with the temporary regulations, the IRS issued proposed regulations that will—when finalized—alter the extension options available for many other information-reporting forms.

Historically, employers filed W-2 forms with the IRS by the end of February and received an automatic 30-day extension with an additional 30-day extension available by filing Form 8809 and providing reasonable cause. Effective for 2016 forms filed in 2017, the new regulations eliminate the automatic 30-day extension and only provide a nonautomatic extension by filing Form 8809 and providing reasonable cause, under penalty of perjury. The IRS expects to only grant extensions for reasons of “extraordinary circumstances or catastrophe,” such as natural disasters or destruction of books and records by fire. The new regulations do not impact Form W-2G filing.

In addition, the temporary regulations expand the list of returns currently eligible for an automatic extension to include:

  • Form 1097-BTC, Bond Tax Credit
  • Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
  • Form 3921, Exercise of an Incentive Stock Option Under §422(b)
  • Form 3922, Transfer of Stock acquired Through an Employee Stock Purchase Plan Under §423(c)

Conversely, the temporary regulations remove Form 1095-A, Health Insurance Marketplace Statement, from the list of returns eligible for an automatic extension, leaving Form 1095-B, Health Coverage, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, eligible.

The proposed regulations issued with the temporary regulations seek to eliminate the automatic 30-day extension for many information forms, including the newly added forms above. This also includes Form series 1098, 1099 and 5498. The proposed regulations eliminating the automatic extension for information returns other than W-2 take effect for returns filed in the year after the IRS finalizes the rules, but not before January 1, 2018.

The changes to extensions of W-2s and other information forms allow for earlier use of matching of wage and withholding information to detect fraudulent filings. The IRS hopes this mitigates some tax losses, along with the pain and suffering of victims who often are unaware of malfeasance until it’s too late.

If you have any questions or concerns regarding these rule changes or informational form due dates, please contact your BKD advisor.

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