Several important tax law procedural changes to protect taxpayers from identity theft and simplify tax filing were recently adopted. Many of these modifications are very relevant to health care providers.

On July 1, 2019, President Trump signed the Taxpayer First Act of 2019 (“the Act”). The Act delivers mostly pro-taxpayer reforms. Among other items, the Act provides limitations on access to tax returns by non-IRS personnel, improvements to IRS cybersecurity pertaining to identity theft, directives to the IRS to improve information technology, and expanded e-filing requirements for information returns, including Form 990. The Act’s provisions have varying effective dates.

Most of the changes are pointed towards improvements to be made by the IRS but others require taxpayers to take certain action steps. For example, with some exceptions, the threshold for mandatory electronic filing of Forms W-2 and 1099 decreases to 100 forms for 2021 and then reduces to 10 forms from 2022 forward. By January 1, 2023, the IRS is expected to have a website allowing taxpayers to prepare and file Forms 1099 online.

What may be important to many health care organizations is that the Act also mandates, effective for tax years beginning after July 1, 2019, all exempt organizations to e-file their Form 990 series returns and their Form 990-T returns. The Act gives the IRS the ability to grant a two-year reprieve from the e-file requirement for certain small tax-exempt organizations, others which might suffer undue hardship, and organizations and entities which file Form 990-T.

Separately, on July 3, 2019, the IRS issued final regulations allowing employers the option to use truncated Social Security Numbers, consisting of only the last four digits of the number, on employee copies of Form W-2 furnished after December 31, 2019. Copies of the Form W-2 filed with the Social Security Administration must contain the complete Social Security Number.

The Act contains many other new provisions not covered here and the IRS continues to issue guidance on additional topics not mentioned in this capsule update. For further details, contact Mike Vecchioni.

This article originally appeared in the MHA Monday Report. https://www.mha.org/Newsroom/ID/2054/Recent-Tax-Law-Procedure-Changes-Affecting-Health-Care-Providers

Recent Tax Law Procedure Changes Affecting Health Care Providers

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