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2017 Q1 tax calendar: Key deadlines for businesses and other employers

Here are some of the key tax-related deadlines affecting businesses and other employers during the first quarter of 2017. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

January 31

  • File 2016 Forms W-2, “Wage and Tax Statement,” with the Social Security Administration and provide copies to your employees.
  • File 2016 Forms 1099-MISC, “Miscellaneous Income,” reporting nonemployee compensation payments in Box 7 with the IRS, and provide copies to recipients.
  • File Form 941, “Employer’s Quarterly Federal Tax Return,” to report Medicare, Social Security and income taxes withheld in the fourth quarter of 2016. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter in full and on time, you have until February 10 to file the return. Employers that have an estimated annual employment tax liability of $1,000 or less may be eligible to file Form 944,“Employer’s Annual Federal Tax Return.”
  • File Form 940, “Employer’s Annual Federal Unemployment (FUTA) Tax Return,” for 2016. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it’s more than $500, you must deposit it. However, if you deposited the tax for the year in full and on time, you have until February 10 to file the return.
  • File Form 945, “Annual Return of Withheld Federal Income Tax,” for 2016 to report income tax withheld on all nonpayroll items, including backup withholding and withholding on accounts such as pensions, annuities and IRAs. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year in full and on time, you have until February 10 to file the return.

February 28

File 2016 Forms 1099-MISC with the IRS and provide copies to recipients. (Note that Forms 1099-MISC reporting nonemployee compensation in Box 7 must be filed by January 31, beginning with 2016 forms filed in 2017.)

March 15

If a calendar-year partnership or S corporation, file or extend your 2016 tax return. If the return isn’t extended, this is also the last day to make 2016 contributions to pension and profit-sharing plans.

© 2016

Take steps to avoid this tax “gotcha”

Last summer the Trade Preferences Extension Act (TPEA) was signed into law, giving the President fast-track trade authority. But like many complex pieces of federal legislation, some provisions buried deep in the law don’t get as much publicity as the headline provisions. However, they can have a big impact on business.

One of these is Section 806, which has nothing to do with trade or globalization but everything to do with raising revenue. Specifically, Sec. 806 increases by up to 150% the potential penalties that must be paid by businesses that fail to file correct information returns or that provide incorrect payee statements.

Specifically, failing to file Forms W-2 and 1099 will trigger the increased penalties. So will failing to file new information returns required by the Affordable Care Act (ACA) for the first time in 2016. They include Forms 1094-C and 1095-C for applicable large employers and forms 1094-B and 1095-B for small employers.

Effective dates are imminent

The new penalties are effective for statements and information returns filed after December 31, 2015. Short-term penalty relief is provided under IRC Sections 6721 and 6722 for companies that demonstrate a good-faith effort to comply with the new ACA information reporting requirements. But this relief applies only to reported information that’s incorrect or incomplete (such as Social Security numbers). Relief isn’t available for companies that fail to file or furnish statements in a timely manner.

The general penalty for failing to file a correct information return with the IRS or provide correct payee statements has increased from $100 to $250 per return or statement. Meanwhile, the maximum annual penalty a company may be subject to has doubled — from $1.5 million to $3 million for large businesses and from $500,000 to $1 million for small businesses (those with gross annual receipts under $5 million).

Companies that correct their filing failures or inaccuracies within 30 days can pay a lower penalty. However, this also has been increased — from $30 to $50 per return with a maximum annual penalty of $175,000 for small businesses (up from $75,000) and $500,000 for large businesses (up from $250,000).

Intentional disregard is costly

If a failure is due to what the IRS considers to be intentional disregard, the penalty rises from $250 to $500 per return or statement with no annual maximum. The penalty amounts are expected to be adjusted for inflation every five years.

Also, failing to file required information and to provide required payee statements could lead to penalties that are double the annual maximum. This is because each of these errors is treated as a separate infraction. So, a large business that doesn’t file W-2 forms with the IRS or provide W-2 forms to employees could face annual penalties of up to $3 million for each error, for a total of up to $6 million.

Systems and controls are recommended

One of the best ways to guard against making the kinds of errors that lead to these increased penalties is to implement appropriate systems and controls for information reporting.

For example, consider using the IRS’s Taxpayer Identification Number On-line Matching service, which enables you to compare the 1099 information you have to the IRS’s records before filing an electronic return. If the information doesn’t match, you can ask payees for verification — and that can help reduce mistakes and subsequent penalties.

Be prepared

Don’t let Section 806 sneak up on you. Take steps now to make sure you aren’t subject to these tougher penalties.

© 2015