Extension of Time to File Certain Information Returns
Summary
SIFMA comments to the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) regarding a proposal that appears in the 2017-18 Priority Guidance Plan to finalize the August 2015 proposed regulation that would limit the availability of automatic extensions for certain information returns.
The May 9th, 2018 update to the 2017-2018 Department of the Treasury Priority Guidance Plan signaled the intent of the U.S. Treasury to finalize proposed rulemaking originally published in August 2015 that would remove the automatic 30-day extension of time to file certain information returns, although extensions would still be permitted in some cases. Under the proposal, forms that would have the automatic extension removed include forms in the W-2 series, 1097 series, 1098 series, 1099 series, 5498 series, and Forms 1042-S, 1094-C, 1095-B, 1095-C, 3921, 3922, and 8027. SIFMA is concerned that any compliance benefit from sunsetting the automatic extension will come at the cost of less accuracy, more amended forms, and, correspondingly, an increase in U.S. tax returns filed by recipients.
See also: U.S. Department of the Treasury, “Office of tax Policy and Internal Revenue Service 2017-2018 Priority Guidance Plan,” Third Quarter Update,
May 9, 2018.
Excerpt
David J. Kautter
Assistant Secretary for Tax Policy and
Acting Commissioner, IRS
U.S. Department of the Treasury
1500 Pennsylvania Ave., NW
Washington, DC 20220
William M. Paul
Acting Chief Counsel and
Deputy Chief Counsel (Technical)
Internal Revenue Service
1111 Constitution Ave, NW
Washington, DC 20224
John Dalrymple
Deputy Commissioner for Services and Enforcement
Internal Revenue Service
Room 5203 P.O. Box 7604
Ben Franklin Station
Washington, DC 20004
Re: Extension of Time to File Certain Information Returns
Dear Gentlemen:
The Securities Industry and Financial Markets Association (SIFMA)1 noticed in the May 9th, 2018 update to the 2017-2018 Department of the Treasury Priority Guidance Plan2 that the U.S. Treasury intends to finalize the proposed rulemaking originally published on August 13, 20153 that would remove the automatic 30-day extension of time to file certain information returns, although extensions would still be permitted in some cases. Under the proposal, forms that would have the automatic extension removed include forms in the W-2 series, 1097 series, 1098 series, 1099 series, 5498 series, and Forms 1042-S, 1094-C, 1095-B, 1095-C, 3921, 3922, and 8027.
In January 2016, SIFMA commented on the notice of proposed rulemaking. 4 Our members collectively file tens of millions of tax information returns with respect to hundreds of millions of financial transactions every year. While we understand and support the IRS’s goal to deter identity theft and tax refund fraud, we are concerned that the August 2015 proposed rule is not targeted at tax information returns where there is a significant nexus to refund fraud.
Our members often take advantage of the automatic extension and file a significant number of their information returns after the March 31st deadline for electronic returns. Our members use the time provided by the automatic extension to compile more accurate returns, a process that greatly benefits both our clients and the tax system as a whole. We test and validate data during the extension period so that the final information returns filed with the IRS do not need to be amended. Our members also collect and compile initial reports and corrections from millions of third parties who report to our members before and after the initial deadline. Eliminating the extension period would have the unintended consequence of increasing the volume of amended returns significantly, causing additional rework and inefficiencies to the IRS and impacted organizations. It would also result in corrections to customers which is likely to cause confusion and a dissatisfaction with customer service. To the extent that information our members report is less accurate, it would defeat one of the stated goals of the proposed rule to promote tax compliance, because the information would be less valuable to the IRS for matching and compliance purposes.
1 SIFMA is the voice of the U.S. securities industry. We represent the broker-dealers, banks and asset managers whose nearly 1 million employees provide access to the capital markets, raising over $2.5 trillion for businesses and municipalities in the U.S., serving clients with over $18.5 trillion in assets and managing more than $67 trillion in assets for individual and institutional clients including mutual funds and retirement plans. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.
2 U.S. Department of the Treasury, “Office of tax Policy and Internal Revenue Service 2017-2018 Priority Guidance Plan,” Third Quarter Update, May 9, 2018. (available at: https://www.irs.gov/pub/irs-utl/2017-2018_pgp_3rd_quarter_update.pdf )
3 Extension of Time to File Certain Information Returns, 80 Fed. Reg. 48,472 (2015) (REG-1322075-14)
4 https://www.sifma.org/wp-content/uploads/2018/03/Extension-of-Time-to-File-Certain-Information-Returns.pdf