NPRC home page
Government Corner      Federal
Accurate W-2s Avoid Costly IRS Penalties
September, 2002
Verifying your worker's names and Social Security numbers (SSNs) may save your business penalties of up to $50 for each incorrect or incomplete W-2 or 1099, up to a maximum of $250,000 per year. If the error or omission is deemed to be intentional disregard of the filing requirements, the penalty is at least $100 for each instance, with no maximum annual penalty amount. Do the math. It's worth the time it takes to do it right!
The penalties apply if you:
Fail to file timely
Fail to include all information required
Include incorrect information
Report an inaccurate SSN
Fail to report a SSN
File on paper when you are required to file on magnetic media
A worker who fails to provide a correct SSN is also subject to a $50 penalty. Note that individual taxpayer identification numbers (ITINs) issued by the IRS can never be used to report earned income. Every worker able to work legally in the United States must have a valid SSN to work.
You can reduce or eliminate the chances of incurring these penalties by taking a few common-sense steps:
Ask each new worker for his/her Social Security card
Accurately record the SSN and name as provided by the worker in your payroll records
Remind your workers to report any name changes due to marriage, divorce, etc., to both the Social Security Administration (SSA) and to you
Use the SSA Employee Verification Service (EVS) prior to submitting W-2s to SSA for processing
For more information about information reporting requirements and/or the penalties discussed above, please visit www.irs.gov and www.ssa.gov/employer.
Source: Internal Revenue Service SB/SE TEC