The IRS has issued final regulations in TD 9838 governing automatic and non-automatic extensions of time for filing certain information returns.

The final regulations retain the removal of the automatic 30-day filing extension for Forms W-2 (except Forms W-2G) and Forms 1099-MISC on which nonemployee compensation is reported. For these filers, a request for one 30-day non-automatic extension on the filing deadline can be made by fling Form 8809, Application for Extension of Time to File Information Returns, with the IRS. The final regulations update the circumstances under which the IRS will approve extension requests.

The final regulations are effective August 3, 2018, and replace the temporary regulations under TD 9730 that were set to expire August 10, 2018.

The IRS explains that eliminating the 30-day automatic filing extension was necessary in an effort to make Forms W-2 available earlier in the filing season to prevent identity theft and tax refund fraud.

Background

With the exceptions noted in the final regulations, two 30-day filing extensions are available by submitting Form 8809. The first request for extension must be made on or before the due date of the information return. For the first request, the 30-day extension is automatically granted and the filer or transmitter is not required to sign the Form 8809 or provide an explanation for the request.

Information returns affected by the final regulations

The removal of the automatic 30-day filing extension applies only to Forms W-2 (except Form W-2G) and Forms 1099-MISC with information in box 7 to report nonemployee compensation.

The automatic 30-day filing extension continues to apply to the following:

— Form W-2G, Gambling Winnings and Losses

— Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding

— Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns

— Form 1095-B, Health Coverage

— Form 1095-C, Employer-Provided Health Insurance Offer and Coverage

— Form 3921, Exercise of an Incentive Stock Option Under Section 422(b)

— Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c)

— Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips

— Form 1097 series

— Form 1098 series

— Form 1099 series (except Form 1099-MISC where nonemployee compensation is reported in box 7)

Circumstances under which a non-automatic extension request will be approved

In time for the 2019 filing season, the IRS intends to update Form 8809 by adding checkboxes that identify the five criteria under which a request for a non-automatic filing extension will be approved. The first four of these are contained on the current Form 8809, but are slightly reworded. The fifth criteria will be added in consideration of comments submitted to the IRS that filing delays often arise due to delays in receiving third-party statements.

Following are the five criteria for approving a non-automatic filing extension:

1. The business suffered a catastrophic event in a Federally Declared Disaster Area that made the business unable to resume operations or made necessary records unavailable.

2. The business suffered a fire, casualty or natural disaster affected the operation of the business.

3. The death, serious illness, or unavoidable absence of the individual responsible for filing the information returns affected the operation of the business.

4. The information return is being filed for the first year the business was established.

5. The filer did not receive timely data on a third-party payee statement. This third-party payee statement might be a Schedule K-1, Partner's Share of Current Year Income, Deductions, Credits and Other Items, Form 1042-S, or the statement of sick pay required under IRS Reg. Section 31.6051-3(a)(1).

6. Additionally, the extension will be granted even if the filer receives the third-party payee statement by the statutory furnishing deadline, provided that the filer did not receive the statement in time to prepare an accurate information return.

Ernst & Young LLP insights

The IRS is requesting comments concerning any additional criteria that should be added to Form 8809 when requesting non-automatic extension requests. Comments on Form 8809 can be submitted here.

The IRS has also indicated that abatement of penalty may be available to filers who fail to file timely but do not receive an extension of time to file. Although requests for abatement may increase under the new rules, the IRS is prepared to consider those additional requests. The IRS is requesting comments regarding how it may reduce the burden on filers who request abatement.

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