What is the penalty for an employer not sending W2?

Understand the penalties for employers who fail to send W2 forms by the January 31st deadline, including fines and maximum penalty caps. Learn how accurate and timely W2 submission is crucial for avoiding IRS penalties.

By Douglas Wade, Attorney

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Table of Contents

1. Introduction

2. What Is a W2 Form?

3. What is the W2 Deadline for Employers?

4. What Is the Penalty for an Employer Not Sending a W2?

5. Can Employers Get an Extension on the W2 Deadline?

Introduction

As an employer, you must send a W2 to all of the people you have employed for the prior financial year. The deadline for sending these W2s is the 31^st of January so that your employees can receive their W2S and prepare their tax returns by the filing deadline. It is important to understand your responsibilities as an employer so that you don’t face penalties for not sending a W2 or sending W2 forms late.

What Is a W2 Form?

A W2 is a payroll report that shows an employee how much tax was withheld from their paychecks for the financial year. This is information an employee needs to prepare their tax return and get their tax rebate if applicable. Employers are required to send an employee a W2 if they paid the employee $600 or more that financial year.

Employers prepare at least 3 copies of the W2.

One copy of the W2 is sent to the employee.
One copy of the W2 the employer keeps on file.
One copy of the W2 the employer files with the IRS.

In some states, the employer may need to prepare a 4^th copy to file with their state or local taxes.

What is the W2 Deadline for Employers?

Employers must send W2s to their employees by the 31^st of January. This is the W2 deadline for employers regardless of the method they choose to send the W2 forms.

Employers can send W2 forms via mail or via a secure electronic portal. Either way, the deadline to send the W2 is still the 31^st of January.

What Is the Penalty for an Employer Not Sending a W2?

Employers will be penalized for both sending a W2 late and for failing to send a W2. They will be penalized per W2, but there is usually a maximum amount if the employer fails to send multiple W2s (or sends multiple W2s late.)

Under the law, employers must provide a W2 that is accurate and ensure it is sent to both employees and the Social Security Administration by the 31^st of January deadline. If not, they will be penalized.

Employers can receive penalties in the following circumstances:

Failure to file the W2 on time.
Failure to report machine readable paper W2 forms (if filing paper W2s).
Failure to report their TIN or incorrect TIN.
Failure to send the employee their W2 on time.
Filing the W2 in the wrong manner.
Incorrect information on the W2.

The amount of the penalty the employer will receive depends on how long after the deadline date they remedy the error.

The penalty for a W2 error that is fixed within 30 days of the 31^st of January is $60 per return, capped at $220,500 for multiple erroneous W2s.

If an employer fails to file a W2 completely and never fixes the W2, then they are charged a penalty of $620. There is no cap for multiple unfiled W2s unless you’re a small business, in which case the cap is $1,261,000.

If you need information on how to get a W2 from a previous employer, consider contacting their HR department directly.

Can Employers Get an Extension on the W2 Deadline?

Yes, if an employer files Form 8809 with the IRS, they may be granted an extension on the W2 deadline. Employers should file their request for W2 extensions as far in advance of the 31^st of January as possible.

The IRS doesn’t automatically grant W2 extensions. They are usually only granted for natural disasters or other extraordinary circumstances. For example, if your books are destroyed in a fire, the IRS may grant a W2 extension. You should clearly detail the reason on the form and attach supporting evidence where relevant.

Remember that IRS Form 8809 is a legal document, and a false declaration is considered perjury.

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