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box 12. See the TIP above Code D on page 12. You also

Any money amounts.

may report certain makeup amounts in box 14. See

3. De minimis rule for corrections. Even though you

Box 14 — Other on page 13.

cannot show reasonable cause, the penalty for failure to file

correct Forms W-2 will not apply to a certain number of

Instead of reporting in box 12 (or box 14), you may

returns if you:

choose to provide a separate statement to your

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Filed those Forms W-2 on or before the required filing

employee showing USERRA makeup contributions. The

date,

statement must identify the type of plan, the year(s) to which

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Either failed to include all of the information required on

the contributions relate, and the amount contributed for each

the form or included incorrect information, and

year.

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Filed corrections of these forms by August 1.

Penalties

If you meet all of the conditions above, the penalty for

The following penalties generally apply to the person

filing incorrect information returns (including Form W-2) will

required to file Form W-2. The penalties apply to paper filers

not apply to the greater of 10 information returns (including

as well as to electronic filers.

Form W-2) or

of 1% of the total number of information

returns (including Form W-2) that you are required to file for

Use of a reporting agent or other third-party payroll

the calendar year.

service provider does not relieve an employer of the

Lower maximum penalties for small businesses. For

responsibility to ensure that Forms W-2 are furnished

CAUTION

purposes of the lower maximum penalties shown in

to employees and are filed correctly and on time.

parentheses above, you are a small business if your

Failure to file correct information returns by the due

average annual gross receipts for the three most recent tax

date. If you fail to file a correct Form W-2 by the due date

years (or for the period that you were in existence, if shorter)

and cannot show reasonable cause, you may be subject to

ending before the calendar year in which the Forms W-2

a penalty as provided under section 6721. The penalty

were due are $5 million or less.

applies if you:

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Intentional disregard of filing requirements. If any

Fail to file timely,

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failure to file a correct Form W-2 is due to intentional

Fail to include all information required to be shown on

disregard of the filing or correct information requirements,

Form W-2,

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the penalty is at least $100 per Form W-2 with no maximum

Include incorrect information on Form W-2,

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penalty.

File on paper when you were required to file

electronically,

Failure to furnish correct payee statements. If you fail to

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Report an incorrect TIN,

provide correct payee statements (Forms W-2) to your

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Fail to report a TIN, or

employees and you cannot show reasonable cause, you

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Fail to file paper Forms W-2 that are machine readable.

may be subject to a penalty. The penalty applies if you fail to

provide the statement by January 31, if you fail to include all

The amount of the penalty is based on when you file the

information required to be shown on the statement, or if you

correct Form W-2. The penalty is:

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include incorrect information on the statement.

$15 per Form W-2 if you correctly file within 30 days (by

March 30 if the due date is February 28); maximum penalty

The penalty is $50 per statement, no matter when the

$75,000 per year ($25,000 for small businesses, defined

correct statement is furnished, with a maximum of $100,000

later).

per year. The penalty is not reduced for furnishing a correct

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$30 per Form W-2 if you correctly file more than 30 days

statement by August 1.

after the due date but by August 1; maximum penalty

Exception. An inconsequential error or omission is not

$150,000 per year ($50,000 for small businesses).

considered a failure to include correct information. An

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$50 per Form W-2 if you file after August 1 or you do not

inconsequential error or omission cannot reasonably be

file required Forms W-2; maximum penalty $250,000 per

expected to prevent or hinder the payee from timely

year ($100,000 for small businesses).

receiving correct information and reporting it on his or her

income tax return or from otherwise putting the statement to

If you do not file corrections and you do not meet any

its intended use. Errors and omissions that are never

of the exceptions to the penalty stated below, the

inconsequential are those relating to:

penalty is $50 per information return.

CAUTION

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A dollar amount,

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Exceptions to the penalty. The following are

A significant item in a payee’s address, and

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exceptions to the failure to file correction information returns

The appropriate form for the information provided, such

penalty:

as whether the form is an acceptable substitute for the

official IRS form.

1. The penalty will not apply to any failure that you can

show was due to reasonable cause and not to willful

Intentional disregard of payee statement

neglect. In general, you must be able to show that your

requirements. If any failure to provide a correct payee

failure was due to an event beyond your control or due to

statement (Form W-2) to an employee is due to intentional

significant mitigating factors. You must also be able to show

disregard of the requirements to furnish a correct payee

that you acted in a responsible manner and took steps to

statement, the penalty is at least $100 per Form W-2 with no

avoid the failure.

maximum penalty.

2. An inconsequential error or omission is not considered

Civil damages for fraudulent filing of Forms W-2. If you

a failure to include correct information. An inconsequential

willfully file a fraudulent Form W-2 for payments that you

error or omission does not prevent or hinder the SSA/IRS

claim you made to another person, that person may be able

from processing the Form W-2, from correlating the

to sue you for damages. You may have to pay $5,000 or

information required to be shown on the form with the

more.

information shown on the payee’s tax return, or from

otherwise putting the form to its intended use. Errors and

omissions that are never inconsequential are those

Specific Instructions for Form W-2

relating to:

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A TIN,

How to complete Form W-2. Form W-2 is a six-part form.

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A payee’s surname, and

Please ensure that all copies are legible. Send Copy A to

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Instructions For Forms W-2 And W-3 - Wage And Tax Statement And Transmittal Of Wage And Tax Statements - 2006 Page 12

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