The NASPP Blog

November 16, 2010

Getting Ready for 6039 Returns – Part 2

Last week I announced that the IRS had posted the final versions of Forms 3921 and 3922 and discussed a few action items companies can take now to prepare for filing these returns. This week I discuss a few more ways in which companies can get ready.

Make New Friends

As I mentioned last week, your friends in Payroll probably won’t be much help with filing these returns, since the filing system they use for Forms W-2 is completely different. Forms 3921 and 3922 will be filed using the same procedures, and for electronic filing, the same system, that is used to file Forms 1099-MISC. Typically the Accounts Payable group is responsible for filing Forms 1099-MISC, so my guess is that these folks could be very helpful as you try to figure the process out. If you don’t know them, now would be a good time to introduce yourself. Maybe schedule a lunch date so that everyone can get to know one another.

Know the Risks (and Make Sure Your Boss Does Too)

At the recent Silicon Valley NASPP chapter meeting, Alison Wright of Baker & McKenzie pointed out that the penalties for late filings and failures to file were recently increased–news to me.

  • If the form is filed late by 30 days or less, the penalty is $30 per form, up to a maximum of $250,000 per year.
  • If the form is late by more than 30 days but is filed by August 1, the penalty is $60 per form, up to $500,000 per year.
  • If the form is filed after August 1 or not at all, the penalty is $100 per form, up to a maximum of $1.5 million per year!
  • The penalty for intentional disregard now starts at $250 per form with no maximum.

The penalties for late participant statements (or failures to distribute participant statements) are now aligned with the penalties for late or omitted returns. This means that if you fail to file or are late with both the return and the participant statement, the penalties listed above are doubled.

These penalties are a lot steeper than they used to be; it would be a good idea for everyone involved to be aware of the financial risks to the company.

Submit a Test File

You don’t want to wait until your live filing to figure out if you’ve made a mistake. The FIRE system will accept test filings until February 15, 2011–take advantage of this opportunity.

Be Ready to Request an Extension

The returns are due to the IRS by February 28 (if filing on paper) or March 31 (if filing electronically). You can, however, receive an automatic 30-day extension–no questions asked–by filing Form 8809, which can be filed electronically or on paper. The request for an extension must be filed by the applicable deadline for filing the returns (either Feb 28 or Mar 31) and you still have to distribute the participant statements on time.

As far as I can tell, there are no penalties for requesting the extension. If it gets down to the wire and you aren’t ready to go with the returns, you can always get a 30-day reprieve.

Comparing Solutions for Section 6039 Compliance
Don’t miss this Thursday’s webcast on “Comparing Solutions for Section 6039 Compliance,” which will present a side-by-side comparison of the third-party solutions available for Section 6039 compliance. This is a great way to kick off your search for a vendor.

Free Conference Session Audio If You Renew by Dec 31
All NASPP memberships expire on a calendar-year basis. Renew your membership by Dec 31 and you’ll qualify to receive the audio for one NASPP Conference session for free!

Join Now and Get Three Months Free and Free Conference Session Audio!
If you aren’t currently an NASPP member, now is the time to become one! Join the NASPP for 2011 and you’ll get the rest of 2010 for free.  If that’s not enough, you’ll also get the audio for one NASPP Conference session for free. Tell all your friends!

NASPP “To Do” List
We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blog. 

– Barbara