IRS Removes Automatic W-2 Extensions to Fight Identity Theft

The Internal Revenue Service has issued final and temporary regulations removing the automatic 30-day extension of time to file information returns on forms in the W-2 series, with the exception of Form W-2G, in an effort to combat tax-related identity theft, starting in 2017.

The current automatic extension will remain in effect next year. It allows an automatic 30-day extension of time to file information returns on forms in the W-2 series (including Forms W–2, W-2AS, W-2G, W-2GU, and W-2VI), 1095 series, 1098 series, 1099 series, and 5498 series, and on Forms 1042-S and 8027, and allows an additional 30-day non-automatic extension of time to file those information returns in certain cases. Taxpayers need to file a Form 8809 to request the extensions.

The new regulations allow a single 30-day non-automatic extension of time to file these information returns. The IRS said the changes are being implemented to accelerate the filing of forms in the W-2 series (except Form W-2G, for reporting gambling winnings) so they are available earlier in the filing season for use in the IRS’s identity theft and refund fraud detection processes.

In addition, the new regulations update the list of information returns subject to the rules regarding extensions of time to file. The temporary regulations affect taxpayers who are required to file the affected information returns and need an extension of time to file.

The new regulations add information returns on forms in the 1097 series and Forms 1094-C, 3921, and 3922 to the list of information returns with procedures prescribed by regulations for the extension of time to file. They also remove information returns on forms in the W-2 series (except Form W-2G) from the list of information returns eligible for the automatic 30-day extension of time to file, and instead provide a single 30-day non-automatic extension of time to file those information returns; and clarify that the procedures for requesting an extension of time to file in the case of forms in the 1095 series apply to information returns on Forms 1095-B and 1095-C, but not 1095-A.

The due dates for filing information returns in the W-2 series on paper are generally either February 28, or the last day of February of the calendar year following the calendar year for which the information is being reported. The due date for filing these information returns electronically is March 31 of the calendar year following the calendar year for which the information is being reported.

The IRS also proposed additional regulations that would remove the automatic extension of time to file other types of information returns, including the Form W-2G, 1042-S, 1094-C, 1095-B, 1095-C, 1097 series, 1098 series, 1099 series, 3921, 3922, 5498 series, and 8027. Under the proposed regulations, filers and transmitters would be permitted to request only one 30-day extension of time to file these information returns by timely submitting a Form 8809, including an explanation of the reasons for requesting the extension and signed under penalty of perjury.

The IRS has been ramping up its efforts to combat taxpayer identity theft in recent years, although the problem remains all too common. According to a report to Congress from National Taxpayer Advocate Nina Olson last month, the IRS and the Taxpayer Advocate Service she runs continue to see large numbers of these cases. In each of calendar years 2013 and 2014, the IRS received about 730,000 identity theft cases with taxpayer impact, and over the last three fiscal years, the Taxpayer Advocate Service has received an average of about 52,000 identity theft cases a year.