Important Changes for Tax Year 2016

September 15, 2016

You most likely are aware that the implementation of IRS PATH Act (Protecting Americans from Tax Hikes Act) created major changes for 1099-MISC and W-2 reporting for tax year 2016.  Most significant is the deadline for reporting 1099-MISC Box 7-Non Employee Compensation and W-2 e-filing to the IRS.  Prior to this change the IRS e-filing deadline was March 31st. The new e-filing deadline for tax year 2016 is January 31st.  That is a full 2 months earlier and coincides with the mailing deadline.
Another significant change for 2016 is the increase in penalties for failing to file a form or filing an incorrect form.  The penalty has increased from $100 to $250 per form.  The yearly penalty cap per company has also increased from $1.5 million to $3 million.
 
Due to these changes it is imperative you are prepared well before January.
 
Below are some suggestions:
 
  • Submit your file for Name/TIN matching with the IRS.  If you do not have this capability we offer this service and can help you.  The Name/TIN match should be done periodically throughout the year so you have time to research any TIN mismatches prior to January.
  • We are not able to submit TINS that are:
    • Less than or more than 9 positions
    • TINs that are entered as 123456789
    • TINs that are entered as 000000000, 111111111, 222222222, etc...
  • Make sure you have complete mailing addresses for all recipients
  • Run a preliminary file to confirm your totals at this point in time are accurate. We have created a 1099-MISC mapping tool that you can install on your computer that will help you identify formatting errors prior to uploading the file via the TSC1099 system.  Using this tool will help us meet the very short deadlines in January. More on the installation and use of the tool in the next two weeks.
If you have any questions please call 312-527-4306 and ask to speak with an 1099 account representative.  We will be posting additional information with suggestions and services to help with the process.