Processing Forms W-2 has been a staple of payroll life. Only a very few changes have occurred to the timetable for processing of the forms in the 37 year ends I have completed. The due date to the employee is on or before January 31st and currently they must be submitted to the Social Security Administration (SSA) by the last day in February if filed on paper and by the last day in March if filed electronically. With the invention of electronic filing the SSA wanted to encourage less paper and more electronic filing so it extended the then due date for all of the last day in February to the last day in March. More time is the reward for filing electronically. But that might be about to change. It appears that this extended deadline may be the cause of excessive tax fraud. The US General Accountability Office (GAO) has issued a report to Congress on this “large, evolving threat” that has been estimated at over $5.2 billion a year. This tax fraud involves the filing of bogus tax returns with bogus Forms W-2 claiming nonexistent tax refunds using identity theft. By the time the IRS gets the info from the SSA the fraud is done. But there is a movement in Congress to prevent this fraud going forward. And that movement is simple. Scale back the due date for filing electronic Forms W-2 to the SSA and get rid of the paper filing. For electronic filers, instead of allowing the extra two months using the March 31st due date, make the due date January 31st for both giving to the employees and filing to the SSA. In combination with this, lower the threshold for filing on paper from the current 250 form limit to 20 by 2016. Of course filing with SSA by January 31st may be unreasonable so the alternate date being proposed is February 15th.
And it isn’t just the feds looking into changing filing requirements including the due dates. The states are also addressing this issue. For example, Alabama is currently proposing the January 31st deadline move from the current February 28th date as of the 2015 Forms W-2 filed in 2016. Nebraska has the due date to the state of February 1st but is proposing moving the current February 15th due date to the employee to February 1st as well. In addition, the states are way ahead of the feds when it comes to lowering the paper filing thresholds. While the fed has remained steadfast at 250 many of the states have already reduced the paper filing from the used to be norm of less than 250 (Illinois) to 100 (Kentucky) to 50 (Massachusetts) to 25 (Mississippi) to even 10 (Minnesota).
The gist of these proposed changes is simple. Times are moving forward and what worked in the past doesn’t necessarily work in the future and payroll must prepare for these changes.