Temporary Regulations End Automatic Extension for Forms W-2

Moving to combat taxpayer identity theft and other fraud with earlier filing of Forms W-2, Wage and Tax Statement, the IRS released temporary regulations (T.D. 9730) Wednesday eliminating an automatic extension for most forms in the W-2 series. The Service simultaneously issued proposed regulations (REG-132075-14) that would extend that treatment to a wide variety of information-reporting forms.

The change affects all forms in the W-2 series except Form W-2G, Certain Gambling Winnings, filed beginning in 2017. The temporary regulations remove a provision allowing an automatic 30-day extension and a second nonautomatic 30-day extension, replacing them with a single nonautomatic 30-day extension. The regulations do not change the due dates, which for paper forms is the last day of February of the calendar year following the calendar year for which the information is being reported, and for electronically filed information returns is the corresponding March 31.

The IRS noted in the preamble to the temporary regulations that falsified wage and withholding information on Forms W-2 often figures in fraud, including fraudulent returns filed by thieves using stolen taxpayer identities. Usually, such returns are filed early in the filing season, well before the IRS is able to verify information from Forms W-2, especially with extensions of as much as 60 days available to W-2 filers.

Currently, filers or transmitters of Forms W-2 and other specified information returns can receive an automatic 30-day extension by submitting Form 8809, Application for Extension of Time to File Information Returns. Then, a second 30-day extension may be requested on a second Form 8809, which must be signed under penalty of perjury and include a statement explaining why more time is needed.

The IRS warns that it will grant the single nonautomatic extension under the temporary regulations “only in limited cases” where the filer or transmitter demonstrates that an extension is needed due to extraordinary circumstances or catastrophe, such as the destruction of records in a fire or natural disaster.

The proposed regulations would similarly remove the automatic 30-day extension and replace it with a single nonautomatic extension for other forms listed in Temp. Regs. Sec. 1.6081-8T, which include Forms W2-G, 1095-B, Health Coverage, 1095-C, Employer-Provided Health Insurance Offer and Coverage; forms in the 1098 series, 1099 series, and 5498 series; and Forms 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, and 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips.

Finally, the temporary regulations update the list of forms in Regs. Sec. 1.6081-8 by adding more recently issued forms, including those in the 1097 series; Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns; Form 3921, Exercise of an Incentive Stock Option Under Section 422(b); and Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c).

—Paul Bonner (pbonner@aicpa.org) is a Tax Adviser senior editor.