On March 4, 2014, the Administration’s Fiscal Year 2015 Budget was released to Congress, less than a week after the House Ways and Means Committee published a discussion draft on proposed tax reforms.
From an employer’s perspective, the 2015 budget is very similar to previous years except for the noteworthy additions of an accelerated due date for filing information returns (e.g., Forms W-2 and 1099-MISC), provisions that further eliminate the filing of paper tax returns, and an expansion of income subject to the self-employment tax.
January 31 deadline for filing Forms W-2 and 1099
In 2011, as a response to the increase in tax refund scams, the IRS unveiled its vision for a “Real Time Tax System” where Forms W-2 and 1099 are available at the start of the tax filing season. Under the current system, individual taxpayers receive their information statements on January 31, but information returns aren’t due until as late as March 31. This filing regime forces the IRS to use a look back method for matching Forms W-2 to individual tax returns.
Throughout 2012, the IRS solicited commentary from stakeholders about the feasibility of accelerating the filing deadline for information returns to January 31. Business groups, such as the National Payroll Reporting Consortium (NPRC) identified numerous challenges businesses would face in meeting this earlier fling deadline, including the likely increase in Forms W-2c because of eliminating the essential gap between when employees receive their information statements and when information returns are filed.
The 2015 budget proposal is the first since 2011 that the administration makes a formal proposal to change the due date for filing information returns. Specifically, Forms W-2 would be due to the Social Security Administration and Forms 1099 to the IRS no later January 31, whether filed on paper on electronically.
At the same time, it is also proposed that the Treasury and IRS be given latitude to lower the 250-return threshold at which electronic filing is mandatory.
For other budget provisions potentially affecting employers, click here