Tax planning and compliance for investors
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By Kaye A. Thomas
Posted January 22, 2009
Weekends, holiday, and a change in the law.
For as long as most of us can remember, the deadline for financial firms to mail Form 1099 to their customers has been January 31. This year you may be receiving these forms more than two weeks later than you normally expect to see them appear in your mailbox.
The biggest reason is a change in the law. Congress decided to allow brokers and other firms that send Form 1099-B (such as mutual fund companies) until February 15 to mail this form. The change comes as part of a law that requires brokers to begin reporting basis, along with sales proceeds, on this form used to report sales of stock or mutual fund shares. The change relating to basis reporting won't take effect until later, so you won't see that information on Forms 1099-B for the 2008 tax year. The new mailing deadline took effect right away, though, so the this change applies for the current tax season.
Strictly speaking, the change affects only Form 1099-B. The date by which your employer has to send Form W-2 is still January 31. Ditto items like Form 1099-INT and Form 1099-DIV.
However, just about all financial firms that send out Form 1099-B provide a combined report that includes information that would otherwise appear on Forms 1099-INT and 1099-DIV. The IRS has told these firms (PDF) they can use the later deadline for the combined report. What's more, they're allowed to do that even if you didn't have any sales this year, so the only information on your report is interest and dividends, which are otherwise subject to the earlier deadline.
Then there's the calendar effect. Generally speaking, when a tax filing date falls on a weekend or holiday, the deadline moves to the next business day. This year, January 31 falls on a Saturday, so that means anything normally due to be mailed by that date doesn't have to be mailed until February 2.
What's more, February 15 falls on a Sunday, and February 16 is Presidents' Day. That means Forms 1099-B, and combined reports from companies that issue these forms, don't have to be mailed until February 17.
How long you wait after that is between you and the Post Office. The upshot is that you may be well into the third week of February before you see forms that normally arrive early in the first week.
Although the focus of this change is Form 1099-B, it may produce a benefit in the form of fewer corrections to Form 1099-DIV. Investors have been plagued with those corrections ever since a change in the law to provide different tax treatment to different categories of dividends. Most firms required to send Form 1099-DIV report that information in a combined form with information that goes on Form 1099-B, and that means they'll have more time to assemble accurate information before sending the forms to their customers.
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