Penalty for Employers Who Don't Send Out W2s
What is a W2?
A W2 form is a document employers send out to their employees at the end of the year. It reports the employees' taxable wages, taxes, and other deductions. A W2 form is used by both the employer and the employee to file their taxes.
What Are the Penalties for Not Sending Out W2s?
If employers do not provide W2 forms to their employees, they can be subject to a variety of penalties. The Internal Revenue Service (IRS) can issue fines for failing to issue W2s in a timely manner. Employers who fail to issue W2s on time will face penalties of up to $50 per return if the forms are not provided by the due date. This penalty can increase to up to $100 per return if the forms are not provided by the due date and the employer has previously been notified of late filing.
What Are the Other Penalties?
The IRS can also impose other penalties for failing to send out W2s. These include the failure to file penalty, the failure to pay penalty, and the accuracy-related penalty. The failure to file penalty is a 5% penalty for each month the return is late, up to a maximum of 25%. The failure to pay penalty is a 0.5% to 1% penalty for each month the taxes are not paid, up to a maximum of 25%. The accuracy-related penalty is a 20% penalty on any underpayment of taxes.
What Other Consequences Might Employers Face?
In addition to penalties imposed by the IRS, employers may also face legal action from their employees if they fail to send out W2s. Employees may sue their employers for breach of contract or wage and hour violations. Employers may also face criminal charges if they willfully fail to send out W2s.
How Can Employers Avoid Penalties?
Employers can avoid penalties by sending out W2s on time. The IRS requires employers to provide W2s to their employees by January 31st of the following year. Employers should also make sure to keep accurate records of their employees' wages and taxes paid. This will help ensure that the W2s are accurate and that the tax liability is paid in full.
What Should Employees Do if They Don't Receive a W2?
Employees who do not receive a W2 should contact their employer immediately. They should also contact the IRS and file a Form 4852, which is used to provide substitute wage and tax statements when a W2 is not received. Employees should also keep accurate records of their wages and taxes paid in order to ensure that they are able to file an accurate tax return.
Conclusion
Employers who fail to send out W2s can face a variety of penalties from the IRS and may even face legal action from their employees. To avoid penalties, employers should make sure to send out W2s on time and keep accurate records of their employees' wages and taxes paid. Employees who do not receive W2s should contact their employers and the IRS to file a substitute wage and tax statement.