Be Careful of New Tax Filing Due Dates
Starting in 2017, there are several new dues dates for various tax filings. Most of these changes were passed by Congress in 2015, but there is always a grace period to allow the IRS and taxpayers to get ready. Here is a listing the major changes:
- Form 1099s and W2s are now due by January 31. Under old law, the forms were required to be sent to employees and payees by January 31 and could be electronically filed by March 31 with the IRS and Social Security Administration. The new law has eliminated the March 31 option. These forms are now due by January 31 for all filings. The penalty for not filing 1099s can be steep. It can easily by $500 per form not filed and in some cases can exceed this amount. Any aggregated payments for services exceeding $600 annually needs a 1099 if paid to an unincorporated entity.
- Form 1065 (partnership returns) used to be due April 15 (for calendar year-ends). They are now due March 15. Congress believes that many extensions for individuals and corporations relate to waiting for partnerships k1s. Therefore, they moved the due date up to March 15. Most practitioners believe this will just lead to more extensions for partnerships (especially since there is no tax due and it is easy to do multiple partnership extensions at one time).
- Form 1120 (corporation returns) has been moved from March 15 to April 15. This is tied to the acceleration of the due date for partnership returns. One quirk is that any June 30 corporate year-end will still need to file by September 15 instead of October 15 for ten years (helps the scoring on the budget).
- FinCen Form 114 (foreign accounts reporting) has been change to correspond with the individual due date of April 15 with an automatic extension until October 15. Under the old law, it was due on June 30 with no extension available. This is a very welcome change for my clients.
- Form 1041 (trust and estate tax returns) can now be extended for five and half months up from the old five month period.
- Form 990 (non-profit returns) can now automatically be extended for six months. The old automatic period was three months with another filing for an additional three-month extension required. This second step has now been eliminated saving time for preparers and the IRS.
- Dependent’s Tax Identification Number (SS #) now must be issued by the return due date. To claim a dependent and any associated credits requires a tax identification number (a social security number in most cases). This number now must be obtained before the due date of the return.
- Form 1098-T (Tuition Statement). In order to claim any education credit, a taxpayer must now obtain a Form 1098-T. In the past, you could claim the credit without the form.
- Form 1098 (Mortgage Interest Statement) will now report (1) the beginning principal balance, (2) the mortgage origination date, and (3) the address of the property that secures the mortgage. This is designed to allow the IRS to more fully determine the proper amount of mortgage interest deduction. This will also make the preparer’s life easier since we can now match up 1098(s) with the underlying property. Many financial institutions have already implemented these changes on their reporting (except for #2).
Many of these changes are welcomed by preparers. Likely the most painful change for farmers is the new 1099 and W2 reporting requirements and the associated penalties with not filing the forms. We will keep you posted with any other changes.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
What are the chances that the due date of filing W-2 and 1099 forms with the IRS or SS will be extended at least for a couple of weeks. Anyone with any sense knows that it will be next to impossible for most small accounting firms to accomplish this as it is currently written.