The end of January meant one thing for us Tax Professionals – the official kick-off of tax season. In addition to the IRS opening the e-filing system which typically goes live at the end of January (it went live January 24th this year – 2022), the deadline for businesses to distribute income statements such as w-2s to employees also occurred.
According to the IRS, “every employer engaged in a trade or business who pays remuneration, including non-cash payments of $600 or more for the year (all amounts if any income, social security, or Medicare tax was withheld) for services performed by an employee must file a Form W-2 for each employee from whom income, social security, or Medicare tax was withheld and/or income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4, Employee’s Withholding Allowance Certificate.”
All Form W-2s had to be filed with the Social Security Administration (SSA) and issued to employees by January 31st. This means that the forms had to be postmarked by that date. If a business did not submit these, issues will arise not only for the business but for the employees, also.
If you are a business owner and as an employer, failed to timely issue your w-2s to the SSA and/or your Staff, here is what you need to know:
- If you realized before January 31st that you will need more time and requested an extension with the IRS and were approved, then this should not be an issue for you.
- This extension of time does NOT apply to the deadline to furnish the statements to the employee; if you also needed more time to issue W-2 forms to your employees, you should have contacted the IRS, Extension of Time Coordinator
- If you were not granted an extension, the IRS may penalize you for failure to file the information returns and/or provide correct payee statements to your employees; penalties are charged for EACH information return AND EACH payee statement you fail to file/provide; the penalties are as follows:
- $50 per information return/payee statement up to 30 days late; $110 per information return/payee statement 21 days late through August 1st; $280 per information return/payee statement filed after August 1st or not filed at all
- There is also the potential for a $560 per information return/payee statement intentional disregard penalty
- There are maximum penalty thresholds for small and large businesses; there is no maximum penalty for intentional disregard
- The IRS will also charge interest on penalty assessments and will accrue until the balance is paid in full
- If you are assessed these penalties, you may be able to have the IRS reduce or remove it if you can establish that you acted in good faith and had reasonable cause – that you had significant reasons for being unable to issue the statements/file the returns timely or that your failure to issue the statements/file the returns resulted from circumstances beyond your control
- This typically must be filed within 45 days from the date you receive the IRS Notice 972CG – Notice of Proposed Penalty
- If you disagree with the penalty proposed/assessed, you can dispute the penalty with the IRS
If you are not issued your W-2 form by your employer, here is what you need to know:
- The forms must have been postmarked by January 31st, not delivered by January 31st
- If you still haven’t gotten your W-2, start by contacting your employer to see when the form was mailed; ask them to re-issue your W-2
- If you do not have your W-2 by the end of February or so, you can contact the IRS Taxpayer Assistance Center to request help you obtain your W-2
- Keep in mind that your employer’s failure to issue you a W-2 does not give you more time to file your return; you will be responsible for filing an extension to file by April 15th if you need more time; you can also use IRS Form 4852 – Substitute Form W-2, estimating your income and withholding taxes as accurately as possible using pay stubs; keep in mind that this unfortunately may delay any refunds due to you as it will take the IRS more time to verify your information
- If you get your W-2 after filing with a Form 4852 and there are discrepancies, you should file an amended return – Form 1040X, to ensure the IRS has the accurate information on file for you
Bryson Law Firm, LLC is here to help. If you are an employer facing late filing penalties for W-2 reporting issues OR if you are an employee running into an issue because your employer has not sent you a W-2, contact our office today. We’ll get you scheduled for a free, initial consultation right away.