What Are the Penalties to Employers for Not Sending W2s?

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The IRS requires employers to send W2 forms to employees by January 31st each year for the prior tax year. But if the deadline is missed, penalties could be assessed unless an extension is filed. 

In this guide, you’ll learn about W2 forms, filing deadlines, extensions, late filing penalties, and when it’s necessary to contact a business tax professional. 

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What is a W-2 Form?

IRS Form W-2 (Wage and Tax Statement) is a federal tax document that shows the total amount of taxes withheld from an employee’s paycheck for the calendar year. Employees need W-2 tax forms to file state and federal tax returns. 

It includes the following information: 

  • Employer identification number, name, address and zip code
  • Employee’s first name, middle initial and last name
  • Employee’s wages, tips, compensation and Federal income tax withheld
  • Social security wages and Social security tax withheld
  • Medicare wages, tips and Medicare tax withheld
  • Social security tips
  • Allocated tips
  • Dependent care benefits
  • Nonqualified plans 
  • Employer’s state ID number
  • State wages, tips and state income tax
  • Local wages, tips and local income tax 
  • Locality name 

“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,” according to the IRS. 

W-2 Filing Deadlines

Employers are required to file Form W-2s with the IRS and Social Security Administration (SSA) by January 31st of the following tax year. So, W-2s for the tax year 2021 are due on January 31st, 2022. If the filing deadline falls on a weekend, it shifts to the next business day. 

Can Your Company Get in Trouble for Not Sending W-2 Forms to Employees?

If you fail to mail W-2 forms to employees by January 31st, you could incur steep penalties. 

The Penalties for Employers Not Sending W-2 Forms

Below is a breakdown of penalties for late filing of W-2 forms. Be mindful that the fee schedule depends on the size of the business, as determined by gross receipts. 

Form W-2 Late Filing Penalties for Small Businesses

Entities with gross receipts of $5 million or less are subject to the following penalties for returns due January through December 31, 2020: 

  • Not more than 30 days late – $50 per statement (limited to $194,500)
  • 31 days late – August 1 – $110 per statement (limited to $556,500)
  • After August 1 or no filing – $270 per statement (limited to $1,113,000)
  • Intentional disregard – $550 per statement 

Form W-2 Late Filing Penalties for Large Businesses

If the company’s gross receipts exceed $5 million, the penalty rates for returns due January through December 31, 2020 are as follows:

  • Not more than 30 days late – $50 per statement (limited to $556,500) 
  • 31 days late – August 1 – $110 per statement (limited to $1,669,500)
  • After August 1 or no filing – $270 per statement (limited to $3,339,000)
  • Intentional disregard – $500 per statement 

Form W-2: Incorrect Information Penalties

You could also incur penalties for failing to file correct information returns. Common errors include including or omitting an incorrect taxpayer identification number (TIN) and paper filings when electronic filings are mandatory. If you file paper forms that aren’t readable by the machine, your business could also be assessed penalties. 

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Owe Back Payroll Taxes? Find Solutions Today

Owe over $25k in personal or business taxes? Get a free consultation with BBB Accredited “A+” rated Larson Tax Relief. With 15 enrolled IRS Agents on staff, they can help you with wage garnishments, tax levies & liens, stop IRS collections, resolve back taxes and more.

How to Deal with Form W-2 Penalties

Fortunately, the IRS permits extensions to avoid Form W-2 penalties. However, you must put in a request before the filing deadline. 

Extension Applications for W-2s

IRS Form 8809 (Application for Extension of Time to File Information Returns) can be used to request a 30-day extension to file W-2 forms with the Social Security Administration. You can only submit the request once, and it must be mailed by January 31st. Electronic submissions are not permissible. 

Suppose you anticipate furnishing W-2 forms to your employees beyond the January 31st deadline. In that case, you can also request an extension from the IRS in writing. 

Mail all requests to: 

Internal Revenue Service

Attn: Extension of Time Coordinator

240 Murall Drive

Mail Stop 4360

Kearneysville, WV 25430

Contact a Business Tax Professional

Is your business facing hefty penalties from the IRS for not filing W2s with the SSA or sending W2s to employees by the deadline? The IRS moves swiftly to enforce the tax code, and it can be challenging to resolve late W-2 filing penalties on your own. 

If you’re unsure what to do next, a business tax professional can help. Consider the experts at Larson Tax Relief to help you resolve payroll issues like this one or other conflicts with federal and state tax authorities. 

The firm has over 16 years of industry experience and a team of enrolled agents that can advocate on your behalf to reach a fair resolution with the IRS. Call 833-833-4151 or complete the online form to request a free evaluation. A member of the team will assess your situation and discuss viable options to resolve your tax matters. 

Larson Tax Relief serves all 50 states and is accredited by the Better Business Bureau with an A+ rating. To date, the firm has helped more than 18,000 satisfied clients and has representatives standing by, waiting to assist you.

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