Preparing for Tax Season: Five Steps to Take Now

 
It’s hard to believe it’s that time again, but the season is here. No, not the holidays, corporate tax season is fast approaching! As you prepare, here are five important things that will make tax season go smoothly:
 
 
 
1. Prepare for the earlier W-2 deadline
 
The 2016 W-2 deadline for the submission of the annual Federal EFW2 file has been moved up to January 31, regardless of whether your tax statements are submitted via paper or electronically. Most states are following suit and changing their deadlines to January 31 as well, to match the SSA/IRS deadlines. The new deadline adds pressure to an already busy month for employers.
 
While the IRS hopes the additional time will help combat tax fraud, its leaves employers with less time to collect the necessary payroll information and prepare for reporting -- undoubtedly leading to an increase in the amount of corrections and re-issues that need to be delivered to employees. If your company requires a large volume of re-issues, consider working with a provider who offers online access to make the correction process more efficient.  
 
Also, be sure to allow extra time for your submissions to the taxing agencies as both the Federal and State systems likely will be inundated due to the condensed timeframe.    
 
 
 
2. Stay current on changing W-4 requirements & expiring forms
 
In our last blog post, we talked about a recent case in Indiana where an employer was fined for failing to obtain completed WH-4 forms from certain employees. Monitoring regulatory changes is time consuming -- our team at CIC Plus has already updated more than 65 tax forms for the U.S. and Canada for 2016 -- but it’s vitally important for employers to stay on top of these changes and ensure you are using the most current tax forms to avoid time-consuming audits and serious fines. By the time employees receive their W-2 statements, it’s too late to correct any mistakes for that tax season.
 
Along the same lines, a number of W-4 forms expire throughout the year and the employee is required to submit a new form yearly to stay qualified as ‘Exempt’. Many of these forms will expire on December 31. For CIC Plus clients, we provide an automated report giving visibility to which employees have expiring forms pending.  Combining this proactive step with your payroll system reports will ensure that Payroll is current with the correct allowances and can communicate to employees who need to submit updated withholding forms.
 
 
 
3. ACA reporting gets real
 
Amidst the continuing speculation about the future of the Affordable Care Act, all signs indicate that the reporting period -- along with the penalties for not following the law -- will move ahead as scheduled this year. The first ACA reporting season was a good test for all companies. It’s expected that the IRS will be much more diligent in monitoring compliance this tax season, so establishing a thorough process (or working with a partner) to collect, manage and report the required information is critical. Failure to provide proper ACA reporting will lead to costly fines. One of the changes for practitioners to pay close attention to this year are changes to the indicator codes, which affect how employee health care information is reported. Also, the submission requirements for your 1094-C forms are complicated, so be sure to follow the proper format and steps. Then we can all take a deep breath and consider how the future of ACA may change.
 
 
 
4. Employee communication is essential
 
As with so many employee initiatives, you can’t over communicate -- especially when processes like ACA reporting are still relatively new. Communicate and educate, then repeat. To minimize employee confusion and manage compliance, make sure you establish resources to address employees’ questions and provide them with information to educate them about what they need to know. It’s not usually enough to publish an article on the company intranet. Consider additional delivery channels, such as home mailings, special FAQ sections in your employee newsletter and a hotline number for employees to call.
 
 
 
5. Be on the lookout for identify theft
 
Another important topic to communicate with your employees is to closely monitor their financial statements and tax information for potential identify theft. Cyber thieves don’t rest and are continually looking for new avenues to capture and prosper from people’s information. Counsel your employees on what precautions to take and how to respond if they believe they have been affected by identity theft. 
 
It’s hard to believe it’s that time again, but the season is here. No, not the holidays, corporate tax season is fast approaching! As you prepare, here are five important things that will make tax season go smoothly:
 
 
 
1. Prepare for the earlier W-2 deadline
 
The 2016 W-2 deadline for the submission of the annual Federal EFW2 file has been moved up to January 31, regardless of whether your tax statements are submitted via paper or electronically. Most states are following suit and changing their deadlines to January 31 as well, to match the SSA/IRS deadlines. The new deadline adds pressure to an already busy month for employers.
 
While the IRS hopes the additional time will help combat tax fraud, its leaves employers with less time to collect the necessary payroll information and prepare for reporting -- undoubtedly leading to an increase in the amount of corrections and re-issues that need to be delivered to employees. If your company requires a large volume of re-issues, consider working with a provider who offers online access to make the correction process more efficient.  
 
Also, be sure to allow extra time for your submissions to the taxing agencies as both the Federal and State systems likely will be inundated due to the condensed timeframe.    
 
 
 
2. Stay current on changing W-4 requirements & expiring forms
 
In our last blog post, we talked about a recent case in Indiana where an employer was fined for failing to obtain completed WH-4 forms from certain employees. Monitoring regulatory changes is time consuming -- our team at CIC Plus has already updated more than 65 tax forms for the U.S. and Canada for 2016 -- but it’s vitally important for employers to stay on top of these changes and ensure you are using the most current tax forms to avoid time-consuming audits and serious fines. By the time employees receive their W-2 statements, it’s too late to correct any mistakes for that tax season.
 
Along the same lines, a number of W-4 forms expire throughout the year and the employee is required to submit a new form yearly to stay qualified as ‘Exempt’. Many of these forms will expire on December 31. For CIC Plus clients, we provide an automated report giving visibility to which employees have expiring forms pending.  Combining this proactive step with your payroll system reports will ensure that Payroll is current with the correct allowances and can communicate to employees who need to submit updated withholding forms.
 
 
 
3. ACA reporting gets real
 
Amidst the continuing speculation about the future of the Affordable Care Act, all signs indicate that the reporting period -- along with the penalties for not following the law -- will move ahead as scheduled this year. The first ACA reporting season was a good test for all companies. It’s expected that the IRS will be much more diligent in monitoring compliance this tax season, so establishing a thorough process (or working with a partner) to collect, manage and report the required information is critical. Failure to provide proper ACA reporting will lead to costly fines. One of the changes for practitioners to pay close attention to this year are changes to the indicator codes, which affect how employee health care information is reported. Also, the submission requirements for your 1094-C forms are complicated, so be sure to follow the proper format and steps. Then we can all take a deep breath and consider how the future of ACA may change.
 
 
 
4. Employee communication is essential
 
As with so many employee initiatives, you can’t over communicate -- especially when processes like ACA reporting are still relatively new. Communicate and educate, then repeat. To minimize employee confusion and manage compliance, make sure you establish resources to address employees’ questions and provide them with information to educate them about what they need to know. It’s not usually enough to publish an article on the company intranet. Consider additional delivery channels, such as home mailings, special FAQ sections in your employee newsletter and a hotline number for employees to call.
 
 
 
5. Be on the lookout for identify theft
 
Another important topic to communicate with your employees is to closely monitor their financial statements and tax information for potential identify theft. Cyber thieves don’t rest and are continually looking for new avenues to capture and prosper from people’s information. Counsel your employees on what precautions to take and how to respond if they believe they have been affected by identity theft. 
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