New requirement when claiming salaries and wage deduction on entity tax returns

With recent IRS procedural changes, you might find your CPA or tax preparer asking for additional information when completing your 2016 entity federal and state tax returns. Specifically, the IRS is now requiring individuals preparing your corporation, S-corporation, or partnership tax return to report the number of W-2’s your entity completed and sent out to employees if you are claiming a deduction for salaries and wages expense.

This change is the culmination of recent efforts by the IRS to reduce the number of fraudulently filed tax returns that are becoming increasingly prevalent. As you meet with your CPA or tax preparer to discuss the preparation of your farm, or agriculture related entity’s tax return this year, please keep in mind that that you will be required to furnish this information. While this is additional step may seem cumbersome, we believe that it will serve to help limit the amount of fraudulently filed returns that are affecting farm businesses around the country.

Special thanks to Michael Lemon for writing this post.

 

  • Principal
  • CliftonLarsonAllen
  • Walla Walla, Washington
  • 509-823-2920

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.

Comments

I think it is important to keep up with what is changing so you can be prepared. Great information, thanks so much for sharing!

Where are these questions located on the tax return? I have been preparing some returns for the past couple of weeks and have not run into this issue. I have also looked at the instructions on the IRS website and could not find any specific instructions to report the number of W-2’s and 1099’s filed.

Thanks!

Hopefully this isn’t a duplicate comment…

I have not heard about this new procedure. Was this in a recent Revenue Procedure? I don’t see where this information will go on the 2016 forms 1120, 1120S, or 1065.

I enjoy reading your blog. Thank you for doing this.

Where is this information reported on the entity return? Do you have any guidance on this – I have reviewed the instructions to Form 1120 & 1120S and do not see this requirement?

Thanks

dkpanasukcpa@gmail.com

I have not heard about this. Which Revenue Procedure is this in? And where is this reported on Forms 1120, 1120S, and 1065? I love your work. Thanks for all you do.

I’ve done a few entity returns so far and don’t see where this “number of W-2’s” is reported. I’ve looked over the 1065’s, 1120’s, and 1120’s and can’t find the spot….can you tell me where it is?

I think this is optional, like drivers license info on returns, some software will have it, some won’t

I don’t see anything on the forms or in instructions. Where did this come from?

I have been unable to find this on these forms for 2016. Could you specify where this requirement is at on one of the forms?

This is the first I have heard of this. Do you have the IRS publication or guidance that details this requirement? Where is it reported on the returns? Thank you!

Where is this requirement showing up? Additional question on these forms?

I am not seeing this question on any of the 2016 entity return forms. Where are you getting this information?