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IRS News: W-2 Filing Deadline May Move

October 01, 2014  |   Tax News   |   Tags: , ,  

The U.S. Government Accountability Office and the U.S. Department of Treasury are both asking the IRS to make a major change that could potentially provide relief income tax filers while creating additional tax season stress for employers. However, the change is being asked for as a measure to protect taxpayers from identity theft and cut down on tax fraud. The change being proposed is that employers be required to file their employees’ W-2s by a new deadline of January 31st.

irs filing deadlines

Currently, January 31st is the deadline for employers to send out W-2s to their employees. However, employers have until March 2nd to file W-2 paper forms by mail to the IRS and until March 31st to e-file for the 2014 income tax filing season next year. This means that any time a taxpayer files a tax return using a W-2 before the employer sends their copy to the IRS; the IRS must either hold off on sending income tax refunds to income tax filers or take it on good faith that the W-2 sent will match the W-2 the employer sends in months later.

Needless to say, this opens the door for IRS scam artists to send in falsified W-2s. These tax frauds generally use a stolen Social Security number, fill in W-2s with the maximum amount of withholding and dependents, state a moderate to low income, and provide an address not actually held by the real SSN holder. It is an old trick that has cost the U.S. Department of Treasury millions upon millions of dollars each year. With significant budget cuts, the IRS simply has not had the resources and employees to efficiently scour every document for obvious signs of fraud. They also do not have the phone service staff to handle the influx of calls from people impatiently waiting on refunds that are either being reviewed for those increasingly prevalent signs of fraud or are actually being sent to an IRS scam artist.

The U.S. Government Accountability Office and the U.S. Department of Treasury, argue that pushing the W-2 filing deadline to January 31st would do a great deal to make tax fraud more difficult for IRS scam artists and signs of tax fraud more obvious to IRS employees. The reasoning is simple. If the IRS has the employer’s W-2 before the employee (or IRS scam artist) files, nothing needs to be taken on good faith or delayed. Instead, there will be something for IRS employees to easily reference when scanning tax returns for signs of fraud.

So far, no decision has been made. The IRS has to figure out if it can afford the cost of shifting the deadline. Since the IRS has been operating under significant budget cuts, this may mean that the deadline shift may not occur.