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Tax Refunds - Employers: Do I have to file W-2s electronically?

IRS refund delays: Why?

As a tax practitioner I have ran into issues with the IRS holding onto Taxpayer's tax refunds in 2023 because of various reason but, primarily, because they cannot match wages that were reported to SSA and IRS. Why? Simply because your employer mailed those W-2s by snail mail or failed to file them. There's a new regulation that was approve (IRS Reg. 301.6011-2) on 2/23/2023 that requires all EMPLOYERS to file the W-2s electronically that are required to file 10 or more W-2s in any calendar year. Folks, don't ignore this regulation because if you do, the IRS will delay your employees tax refunds. Now if you don't care about that, then take the IRS penalty that will come with failing to file electronically. The penalty can add up to $50-$290 per W-2. If you have money coming out of your ears and just don't know what to do with it then at the very least, file your W-2s on time and make a contribution to the children's hospital.

For those employers that strive to make their employees happy this is one of the things you can't ignore. If you need assistance getting set up with filing electronically, call us at 208-935-1040 and we'd be happy to assist you with the set up process. You can also follow this BSO registration link that has detailed instructions on creating an employer account and requesting access to services.

When a W-2 is filed by paper, it takes the SSA staff a significant amount of time to process those W-2s, Meaning, someone has to get them into the system. When the IRS receive a tax return from a taxpayer (i.e. your employee), they use a tool to verify wages that were reported to SSA (Social Security Administration). If those wages have not been processed into the SSA system, the IRS cannot verify those wages and, apparently, they only try once. Why? Because they are very busy...and it's a bureaucracy...and among other things;-) Now if a taxpayer doesn't take the EITC or CTC credits then there are no worries. The IRS processes those returns with few issues. If IRS does not verify those wages, they send out a letter to that taxpayer and place their refund on hold. It then sits on hold till the taxpayer addresses the issue. This is time consuming because you have to get your employer involved in the process.

I assume that IRS will work out a better solution on getting wages verified but for now the problem persists. If you're an employee and you ran into this issue start gathering documents from your records. It is a good idea to keep pay stubs, at the very least the last three months of your employment, for your records in a file cabin or electronically, If your employer has not caught up to the digital world we are in today, then that is too bad. Most employers now provide electronic copies of your payroll records. Be proactive and save those records to your phone. If you don't have that option then you are living in a dinosaur era. Get paper copies then.

If you have not received your refund or If you'd like more information please contact us at 208-935-1040.


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