Why Do the Employee and the Employer File W-2 Information Two and A Half Months Apart?

Do your payroll phones start ringing on January 2 (or earlier) with employees calling to ask when they will get their W-2s?  “I’m seeing my tax guy tomorrow so I can get my refund early this year, and I need my W-2 ASAP!”  You hear it daily.  But have you ever wondered how the IRS can send those refunds before the SSA ever gets your employer information returns? 

Identity thieves not only wondered how this happens, they figured out it was a goldmine.  Fraudsters file returns and claim refunds before legitimate taxpayers can claim their money, and virtual eons before employers are even required to submit data to the SSA.  In an effort to fight this cybercrime, the IRS is considering switching up the filing dates and closing the gap between when the employee can file and when the employer must submit returns. 

Here are the two ideas being discussed currently:

  1. The IRS is talking about moving the deadline for employers to file closer to the time that employees can file.  This likely shortens employer processing time.
  2. Employers are talking about moving the employee’s tax filing season opening until after the employers’ filing deadline.  This lengthens employee wait time for refunds, and also probably shortens employer processing time. 

If either employer or employee filing date changes, it will be big news that will rock the W-2 world for everyone accustomed to the January 31, February 28, March 31, and April 15 dates.  Serious steps will likely be taken to combat IRS fraudulent tax filings, and this may be one of them.  Watch for more on this topic.

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Payroll Manager Sarah Williams, Edwin Watts Golf, LLC

Optimum is always willing to listen to the person using the software and make the software more user-friendly.