COUNTDOWN TO YEAR-END

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In the past month and a half, Colorado, Delaware and Iowa joined the 22 other states with annual reconciliation dates that conform to the new federal deadline for annual returns and Forms W-2, Wage and Tax Statement.

The new federal deadline, included in the federal tax extenders bill (Pub. L. 114-113) signed last year by President Barack Obama, is to take effect for tax year 2016 forms filed in 2017. The law moved the deadline for federal copies of Form W-2 to Jan. 31 from Feb. 28. The new deadline for federal forms is part of an effort to combat tax refund fraud and identity theft.

Since the law was enacted, 11 states have followed suit, with Colorado, Delaware and Iowa as the most recent states to join the trend.  In total, 25 states conform to the federal deadline for annual returns. Employers in Alabama, Colorado, Connecticut, Delaware, the District of Columbia, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maryland, Minnesota, Mississippi, New York, North Carolina, Ohio, Oregon, Pennsylvania, Puerto Rico, South Carolina, Utah, Vermont, Virginia and Wisconsin, are to file their 2016 annual returns by Jan. 31. Nebraska has a Feb. 1 annual reconciliation deadline.

Fifteen states have not yet changed deadlines, though it’s worth monitoring them for changes. Those states are Arizona, Arkansas, Hawaii, Kansas, Maine, Massachusetts, Michigan, Missouri, Montana, New Jersey, New Mexico, North Dakota, Oklahoma, Rhode Island and West Virginia.

Even in cases where the due date for forms was not moved to earlier in the year, filing early may benefit employers. The Maine Revenue Service encouraged employers to file as early as possible to combat identity theft and refund fraud, even though the state annual return due date remains Feb. 28, in an October Tax Alert.

States that did not previously require annual returns may establish the requirement for similar reasons. Although Colorado and Delaware moved existing annual reconciliation dates up to Jan. 31, Iowa did not require employers to file annual returns before tax year 2016. Earlier this year, Oklahoma also established an annual reconciliation, which is to take effect for tax year 2016 forms, though the deadline is Feb. 28, not Jan. 31. California and Illinois are the only states with state income tax that do not require employers to file annual returns, though Illinois does require state copies of Form W-2 from some employers.