It shouldn’t come as a surprise that the volume of returns received and processed by the IRS is down this filing season compared to last year. The question is why, and the answer likely has more to do with the government shutdown and new tax law than with filers missing deadlines.
Although it is early in the season, reporting statistics so far this year have dropped across the board, according to Tax Notes, with numbers for returns received and processed, e-file receipts, website usage, and total refunds issued dropping for TY 2018 filing compared to the same period for TY 2017 filing. The numbers cover Jan. 28-Feb. 1, 2019, compared to Jan. 29-Feb. 2, 2018.
Delays because of 1040s, not 1099s
Despite a 35-day government shutdown that lasted until Jan. 25, the IRS did not relax deadlines for filing 1099 and W-2 forms, meaning reporting season was as busy as ever for companies faced with tighter deadlines than in years past. As such, late filings were not as likely to be at fault for the IRS’s sagging numbers as other factors were, including:
The government shutdown. The obvious culprit took a bite out of reporting season, as the IRS still had more than 87 percent of its workforce furloughed the week before reporting season began. When season finally did begin, on Jan. 28, the IRS had only called back 60 percent of furloughed employees, and those workers had to take on the burden of more than a month of preparation time lost as a result of the shutdown.
New filing processes. Revised form 1040 filing processes and new instructions have led taxpayers to approach filing more cautiously this year than in years past. That has probably led to a delay in individual taxpayers sending their forms to the IRS. The delay, then, is far more likely to be on the 1040 side than on the 1099 side.
The Tax Cuts and Jobs Act. In the first filing season since it passed, the new tax law has introduced new rules for standard deductions and itemization, among other new regulations. Cautious of losing refund money, which has dropped so far this year compared to last, taxpayers are taking more time to study their returns carefully before submitting them, slowing return processing.
Deadlines remain in place
As noted, the IRS stated explicitly that filing deadlines would not change for TY2018 documents despite the government shutdown. They remain in place, with some relevant tax information reporting dates still upcoming:
Jan. 31 to recipient and IRS:
1099-MISC (box 7), W-2
Jan. 31 to recipient, Feb. 28 (if filed on paper) or Mar. 31 (if filed electronically) to IRS:
1099-MISC (non-box 7), 1099-INT, 1099-R, 1099-DIV, 1098 series (except 1098-C, due to donor 30 days from sale or contribution)
March 15 to recipient and IRS:
May 31 to recipient and IRS:
5498 (except for FMV/RMD, Jan. 31 to recipient)
Learn how Sovos has enabled companies to stay compliant with 1099 regulations for more than three decades.