The Trade Preferences Extension Act of 2015 was signed into law at the end of June 2015. Learn more about what this could mean for your business.
As part of this new law, a provision was included that doubles the cap from $1.5 million to $3 million for 1) failure to file correct tax information returns and 2) failure to provide payee statements. In both cases, fines have been increased from $100 to $250. These changes are effective for returns and statements required to be filed after December 31, 2015.
The impact is likely to be significant since it applies to a wide variety of information returns and statements, including W-2s, 1099s, and Forms 1042 and 1042-S (Annual Withholding Tax Return for U.S. Source Income of Foreign Persons).
Additionally, the IRS has formed special units to address information reporting issues within the Large Business and International Division (LB&I) as well as the Office of Associate Chief Counsel (International). This may suggest heightened IRS interest in information reporting audits that could lead to adjustments which increase penalties.
With this it is critical that businesses be vigilant about filing information returns and providing payee statements to all applicable parties.
If you have questions about these requirements, get in in touch with us today.