Electronic Submission of W-2s & 1099s Theresa Dvorak

Requirements Prior to Tax Year 2016

Verified Summary of Payments Report (VSP) Every withholding agent required to withhold Iowa income tax was required to file an annual Verified Summary of Payments Report (VSP) with the Department prior to the last day of February following the tax year.

W-2s & 1099s Prior to tax year 2016, withholding agents were not to submit W-2 forms and 1099 forms with the VSP. W-2 forms and 1099 forms were provided to the Department only if requested.

Requirements for Tax Year 2016

Verified Summary of Payments Report (VSP) Every withholding agent required to withhold Iowa income tax is required to file an annual VSP with the Department prior to the last day of January following the tax year.

W-2s, W-2Gs, & 1099s Beginning in 2017 for tax year 2016: Withholding agents with 50 or more employees must electronically file W-2 forms with the Department by January 31, 2017. Withholding agents with less than 50 employees may, but are not required to, electronically file W-2 forms with the Department by January 31, 2017. Withholding agents are encouraged to, but are not required to, electronically file W-2G and 1099 forms with the Department by January 31, 2017.

Requirements for Tax Year 2017 and Future Years

Verified Summary of Payments Report (VSP) Every withholding agent required to withhold Iowa income tax is required to file an annual VSP with the Department prior to the last day of January following the tax year.

W-2s, W-2Gs, & 1099s Beginning in 2018 for tax year 2017: All withholding agents are required to electronically file W-2, W-2G, and 1099 forms with the Department by the last day of January following the tax year.

1099s Form 1099-B, Proceeds From Broker and Barter Exchange Transactions Form 1099-C, Cancellation of Debt Form 1099-DIV, Dividends and Distributions Form 1099-G, Certain Government Payments Form 1099-INT, Interest Income Form 1099-K, Payment Card and Third Party Network Transactions Form 1099-MISC, Miscellaneous Income Form 1099-OID, Original Issue Discount Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

Submitting Wage Statements and Information Returns

Quick Tips Include the Iowa withholding permit number on every wage statement and information return reportable to Iowa. It is commonly displayed with a hyphen between the second and third digits and the ninth and tenth digits: 12-3456789-012 However, for electronic reporting purposes, omit the hyphens and report it as a twelve-digit number: 123456789012

Quick Tips Transmitters collect data from employers/payers and serve as a third-party pass-through to Iowa’s eFile & Pay. A transmitter must use its own BEN (explained below) to access eFile & Pay as a Bulk Filer, just as Payroll Service Providers do. Transmitters must register with the Iowa Department of Revenue in order to become an Iowa eFile & Pay Bulk Filer. Files uploaded by a transmitter are subjected to the same rules applied to files uploaded by Payroll Service Providers.

Quick Tips Payroll Service Providers’ clients’ 12-digit Iowa withholding permit numbers must match Iowa Department of Revenue records for their filings to be accepted.

Quick Tips Business eFile Number (BEN) The Iowa Department of Revenue assigns a BEN to every registered business entity that may need to log into Iowa eFile & Pay such as an employer, payer, or bulk filer (payroll service provider or transmitter). A bulk filer must use its own BEN to log into eFile & Pay, not its client’s BEN. A bulk filer must report the respective client’s (employer/payer) BEN on RV and K records.

Quick Tips Iowa requires inclusion of the ‘K’ State Totals Record that the IRS provides for state summaries; report totals of Iowa (State Code 19) ‘B’ records reported since the last ‘A’ Record. Exclude counts/amounts from ‘B’ records corresponding to states other than Iowa. Iowa requires numeric fields to be right-justified and zero filled leftward from the most significant digit (i.e. not blanks). Follow IRS rules for money fields; Iowa requires same.

Specifications & Record Formats Iowa specifications and record formats are compatible with federal specifications and record formats: SSA – Social Security Administration Publication No. 42-007, Specifications for Filing Form W-2 Electronically (EFW2) for Tax Year 2016. Copies of the SSA file may be used for Iowa filing as long as the state information, known as the 'RS' records are included. IRS – Internal Revenue Service Publication 1220 Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G for Tax Year 2016. Copies of the IRS file may be used for Iowa filing as long as the state information is included in the ‘B’ record.

Iowa Does Not Accept Other types of files (for example, PDFs scanned or created with any other software product). Paper W-2 wage statements and 1099 information returns. CD-ROMs; Cartridges; Flash drives; Floppy disks; Magnetic media; PDF files created at SSA website.

Is Authorization Required to Upload a File? Companies registered to file Iowa withholding returns use their existing eFile & Pay credentials to upload wage statements and information returns for their own company. Payroll Service Providers and Transmitters registered as Bulk Filers with the Iowa Department of Revenue use their own eFile & Pay credentials to upload withholding returns, wage statements, and information returns on behalf of their clients.

Is a Test Required? No, sending a test file is not required, however it is recommended. Test files may be uploaded through Iowa eFile & Pay in DEMO mode https://tax.iowa.gov/efile-pay.

Is a Transmittal Letter Required? No. Do not include a transmittal letter.

How Will I Know the Department Received my File? For each file Iowa receives, Iowa posts a corresponding results file. If there are issues with your data, the results file will report why your file (or parts of it) was rejected; error messages will be listed accordingly. You will need to correct the errors and resubmit a new file.

Does Iowa Participate in Combined Reporting? The SSA offers no Combined Reporting program for reporting W-2 wage statements to both the SSA and state revenue agencies. The IRS offers Combined Federal/State Filing program (CF/SF) for reporting certain information returns to both the IRS and state revenue agencies, but IDR does not participate in the program.

W-2 File Record Format Iowa W-2 specifications conform to the SSA’s EFW2 format. Iowa requires W-2 data to be recorded in ASCII. Each record must have a uniform length of 512 bytes, followed by a Carriage Return / Line Feed (CR/LF). Iowa requires inclusion of the ‘RS’ State Wage Record to report State of Iowa revenue and taxation detail. Exclude quarterly unemployment compensation from this record.

W-2 File Record Format Iowa requires inclusion of the ‘RV’ State Total Record that the SSA provides for state summaries; report totals of Iowa (State Code 19) ‘RS’ records reported since the last ‘RE’ Record. Exclude counts/amounts from ‘RS’ records corresponding to states other than Iowa. Iowa requires numeric fields to be right-justified and zero filled leftward from the most significant digit (i.e. not blanks). Follow SSA rules for money fields as Iowa requires same.

Information Return File Record Format Iowa Information Return specifications conform to the IRS Publication 1220 format. While Iowa does not participate in the IRS Combined Federal/ State Filing (CS/SF) Program, Iowa does follow IRS formatting specifications for electronic filing Information Returns directly with Iowa. Iowa requires Information Return data to be recorded in ASCII. Each record must have a uniform length of 750 bytes including the Carriage Return / Line Feed (CR/LF) at the end of the record.

Information Return File Record Format Iowa requires inclusion of the ‘K’ State Totals Record that the IRS provides for state summaries; report totals of Iowa (State Code 19) ‘B’ records reported since the last ‘A’ Record. Exclude counts/amounts from ‘B’ records corresponding to states other than Iowa. Iowa requires numeric fields to be right-justified and zero filled leftward from the most significant digit (i.e. not blanks). Follow IRS rules for money fields; Iowa requires same.

Resources

Information Online

Information Online

https://tax.iowa.gov

Receive Automatic Updates

Subscribe to the Following Topics Newsroom Tax Information eFile & Pay Information Sign-up for Due Date Reminders Economic, Fiscal, & Statistical Information Electronic Filing NOTE: These replace the eLists formerly used

Follow Us on Twitter @IDRBusinessTax @IDRIncomeTax @IDRTaxPros

Like Us on Facebook www.facebook.com/iowadepartmentofrevenue

Purpose of this Presentation This presentation is intended for general educational purposes only. Anyone involved in an audit or protest must contact the Department representative they are working with on that issue.

What Questions Do You Have?

THANK YOU!!