State Official Tells Senate Panel Earlier W-2 Deadlines Could Aid Tax Fraud Fight

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By Marc Heller

Reducing the two-month filing deadline for Forms W-2, Wage and Tax Statement, would help combat fraud, the chairman of the Utah State Tax Commission told the Senate Finance Committee on March 12.

John Valentine said the two-month gap between when employers send W-2s to employees and when the forms are sent to the Social Security Administration leaves the system vulnerable to exploitation and fraudulent refunds.

“That gap is a big problem for us,” Valentine said at the hearing on fighting tax fraud.

New York and other states have adjusted deadlines for wage statements and other states are moving in that direction, Valentine said after the hearing, adding that the federal government should follow suit.

Legislation would be required to make the change, Valentine said. Under federal rules, Forms W-2 are sent to employees by Jan. 31, and employers have until March 31 to file the forms with the SSA.

The gap in filing deadlines attracted the attention of the Government Accountability Office, which recommended in a September 2014 report that Congress change the deadlines. The IRS does not match information from tax returns with W-2 information from the SSA until July, well after refunds to individual taxpayers are sent.

Reduce Threshold for Electronic Filing of W-2s, SSA Official Says

Additionally, the GAO report suggested that Congress allow the Treasury Department to lower the annual threshold for electronic filing of W-2s to include companies that file five to 10 of the forms a year. More than 4.5 million establishments have fewer than 10 employees, Census Bureau data showed.

“Reducing the e-file threshold would allow IRS to obtain timely, accurate data from a significant number of employers and would enhance the benefits IRS could obtain from the accelerated W-2 deadline and pre-refund W-2 matching,” the report said.

Tom Bricker, program analyst and project manager at the SSA, also favored reducing the gap to limit the amount of paper filing by employers, which he said totals slightly more than half. Employers that file more than 250 Forms W-2 a year must do so electronically, unless granted a waiver by the IRS. The White House fiscal year 2016 budget proposal would reduce the electronic reporting threshold to five forms, he said.

“It's where we need to be,” Bricker said March 2 at the American Payroll Association's Capital Summit in Washington. Reducing the threshold to employers that file at least 50 would be an incremental change, he said. “We have to go down to five because there are a lot of small paper reporters,” he said.

Reducing the level to five also would help if the frequency of wage reporting were increased, which has been discussed in Congress, Bricker said. The proposed fiscal 2016 federal budget also seeks to have employers report wages to the SSA quarterly instead of annually.

To contact the reporters on this story: Marc Heller in Washington at and Michael Trimarchi in Washington at