Employers should be aware of certain dates on the Internal Revenue Service and Social Security Administration reconciliation timeline, said John Myett, director of government affairs at ADP Inc.
On Jan. 31 after the applicable tax year, paper and electronic Form W-2, Wage and Tax Statement, and Form 1099s, are due, Myett said. Feb. 28 is the late-filing deadline for paper W-2s and 1099s, and the date by which employers must file to limit the late-filing penalty to $50 per late document, he said.
Aug. 1 is the late-filing date for electronic or paper W-2s and 1099s, Myett said, adding that employers should file before then at all costs because after Aug. 1, the penalty for each document that is filed late increases to $260 from $100.
Nov. 15 marks the start of the internal IRS/SSA Combined Annual Wage Reporting program, which runs for 12 months, Myett said.
The dates apply to all tax years, Myett said at the annual American Payroll Association Congress in Orlando, Fla.
The Combined Annual Wage Record program compares the total wages reported on Form 941, Employer’s Quarterly Federal Tax Return, with the total reported on Form W-2 to ensure that reported wages are the same, said Scott Mezistrano, CPP, senior national account manager with the Internal Revenue Service.
If the total wages reported on Form 941 are less than those on Form W-2, the IRS sends an inquiry to the employer, and the employer has 30 days to respond, Mezistrano said.
After the employer fails to respond to the inquiry, the IRS sends a proposed tax increase to which the employer must respond within 30 days, Mezistrano said. If the employer fails to respond, the IRS sends the employer a tax assessment to which it must respond within 10 days, he said.
If the total wages reported on Form 941 exceed those on Form W-2, the Social Security Administration sends the employer a questionnaire to which the employer must respond within 45 days, said Scott Pedersen, an SSA program manager who also presented at the workshop.
After the employer does not respond to the questionnaire, the administration sends a follow-up letter, and the employer again has 45 days within which to respond, Pedersen said. If the employer does not respond, the IRS will impose a 10 percent intentional disregard penalty on the employer because the SSA cannot penalize employers, he said.
Employers can expect to hear from the agency that is being shortchanged, Mezistrano told workshop participants.
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