Instructions For Forms W-2 And W-3 - Wage And Tax Statement And Transmittal Of Wage And Tax Statements - 2017 Page 14
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33maximum penalty is $3,218,500 per year ($1,072,500 for
most recent tax years (or for the period that you were in
small businesses).
existence, if shorter) ending before the calendar year in
which the Forms W-2 were due are $5 million or less.
If you do not file corrections and you do not meet
Intentional disregard of filing requirements. If any
any of the exceptions to the penalty, the penalty is
!
failure to timely file a correct Form W-2 is due to
$260 per information return. The maximum
CAUTION
intentional disregard of the filing or correct information
penalty is $3,218,500 per year ($1,072,500 for small
requirements, the penalty is at least $530 per Form W-2
businesses).
with no maximum penalty.
Exceptions to the penalty. The following are
Failure to furnish correct payee statements. If you fail
exceptions to the failure to file correct information returns
to provide correct payee statements (Forms W-2) to your
penalty.
employees and cannot show reasonable cause, you may
1. The penalty will not apply to any failure that you can
be subject to a penalty as provided under section 6722.
show was due to reasonable cause and not to willful
The penalty applies if you fail to provide the statement by
neglect. In general, you must be able to show that your
January 31, 2018, if you fail to include all information
failure was due to an event beyond your control or due to
required to be shown on the statement, or if you include
significant mitigating factors. You also must be able to
incorrect information on the statement.
show that you acted in a responsible manner and took
The amount of the penalty is based on when you
steps to avoid the failure.
furnish the correct payee statement. This penalty is an
2. An inconsequential error or omission is not
additional penalty and is applied in the same manner, and
considered a failure to include correct information. An
with the same amounts, as in Failure to file correct
inconsequential error or omission does not prevent or
information returns by the due date.
hinder the SSA/IRS from processing the Form W-2, from
Exceptions to the penalty. An inconsequential error
correlating the information required to be shown on the
or omission is not considered a failure to include correct
form with the information shown on the payee's tax return,
information. An inconsequential error or omission cannot
or from otherwise putting the form to its intended use.
reasonably be expected to prevent or hinder the payee
Errors and omissions that are never inconsequential are
from timely receiving correct information and reporting it
those relating to:
on his or her income tax return or from otherwise putting
A TIN,
the statement to its intended use. Errors and omissions
A payee's surname, and
that are never inconsequential are those relating to:
Any money amounts.
A dollar amount,
A significant item in a payee's address, and
3. De minimis rule for corrections. Even though you
The appropriate form for the information provided, such
cannot show reasonable cause, the penalty for failure to
as whether the form is an acceptable substitute for the
file correct Forms W-2 will not apply to a certain number of
official IRS form.
returns if you:
Filed those Forms W-2 on or before the required filing
See Exceptions to the penalty in Failure to file correct
date,
information returns by the due date, for additional
Either failed to include all of the information required on
exceptions to the penalty for failure to file correct payee
the form or included incorrect information, and
statements.
Filed corrections of these forms by August 1.
Intentional disregard of payee statement
requirements. If any failure to provide a correct payee
If you meet all of the de minimis rule conditions, the
statement (Form W-2) to an employee is due to intentional
penalty for filing incorrect information returns (including
disregard of the requirements to furnish a correct payee
Form W-2) will not apply to the greater of 10 information
statement, the penalty is $530 per Form W-2 with no
returns (including Form W-2) or one-half of 1% of the total
maximum penalty.
number of information returns (including Form W-2) that
you are required to file for the calendar year.
Civil damages for fraudulent filing of Forms W-2. If
4. Forms W-2 issued with incorrect dollar amounts
you willfully file a fraudulent Form W-2 for payments that
may fall under a safe harbor for certain de minimis errors.
you claim you made to another person, that person may
The safe harbor generally applies if no single amount in
be able to sue you for damages. If you are found liable,
error differs from the correct amount by more than $100
you may have to pay $5,000 or more in damages. You
and no single amount reported for tax withheld differs
may also be subject to criminal sanctions.
from the correct amount by more than $25.
Specific Instructions for Form W-2
If the safe harbor applies, you will not have to correct
the Form W-2 to avoid penalties. However, if the payee
How to complete Form W-2. Form W-2 is a multi-part
elects for the safe harbor not to apply, you may have to
form. Ensure all copies are legible. Send Copy A to the
issue a corrected return to avoid penalties. For more
SSA; Copy 1, if required, to your state, city, or local tax
information, see Notice 2017-9, 2017-4 I.R.B. 542,
department; and Copies B, C, and 2 to your employee.
available at IRS.gov/irb/2017-04_IRB/ar11.html.
Keep Copy D, and a copy of Form W-3, with your records
Small businesses. For purposes of the lower
for 4 years.
maximum penalties shown in Failure to file correct
Enter the information on Form W-2 using black ink in
information returns by the due date, you are a small
12-point Courier font. Copy A is read by machine and
business if your average annual gross receipts for the 3
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General Instructions for Forms W-2 and W-3 (2017)
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