Form W-2 Penalties

Employers are responsible for making sure that W-2 Forms are distributed to each of their employees and for correctly filing with the Social Security Administration (SSA) by the January 31 deadline on an annual basis. A penalty is charged during W-2 filing, if correct information is not filed through the return and correct information is not provided for the employee. Thus, if you don’t file a correct Form W-2 with the SSA, that would also mean that you don’t provide a correct Form W-2 statement for your employee, and thereby your penalty is fixed based upon both instances.

What Happens if you Don’t File Form W-2?

If you fail to file Form W-2 by the deadline and cannot show reasonable cause, you may be subject to penalties. You may be penalized if you:

  • Fail to file by the deadline.
  • Fail to include all the required information to complete your Form W-2.
  • File with incorrect information.
  • File with paper forms when you’re required to e-file.
  • Report an incorrect TIN.
  • Forget to include a TIN, or
  • File paper W-2 Forms that are not machine-readable.

Penalty Rates

Small Businesses With Gross Receipts Less Than or Equal to $5 Million

(Based on average annual gross receipts for the most recent 3 taxable years)

Time returns filed/furnished Due 01-01-2011
through 12-31-2015 		Due 01-01-18
through 12-31-2018 (inflation adjusted)
Not more than 30 days late $30 per return/
$250,000 maximum 		$50 per return/
$187,500 maximum
31 days late – August 1 $60 per return/
$500,000 maximum 		$100 per return/
$536,000 maximum
After August 1 or Not At All $100 per return/
$1,500,000 maximum 		$260 per return/
$1,072,500 maximum
Intentional Disregard $250 per return/
No limitation 		$530 per return/
No maximum

Penalty Rates

Large Businesses With More Than $5 Million in Gross Receipts and Government Entities

(Based on average annual gross receipts for the most recent 3 taxable years)

Time returns filed/furnished Due 01-01-2011
through 12-31-2015 		Due 01-01-18
through 12-31-2018 (inflation adjusted)
No more than 30 days late $30 per return/
$75,000 maximum 		$50 per return/
$536,000 maximum
31 days late – August 1 $60 per return/
$200,000 maximum 		$100 per return/
$1,609,000 maximum
After August 1 or Not At All $100 per return/
$500,000 maximum 		$260 per return/
$3,218,500 maximum
Intentional Disregard $250 per return/
No limitation 		$530 per return/
No maximum

Penalties for filing incorrect returns

  • Failing to file by the deadline without showing reasonable cause.
  • Failing to report a Taxpayer Identification Number (TIN).
  • Reporting an incorrect TIN.

Penalties for not providing correct payee statements

  • Failing to provide a correct payee statement by the deadline without showing reasonable cause.
  • Failure to include all required information on the statement, or
  • Incorrect information is provided on the statement.

Penalties for Filing Form W-2 Late

The IRS imposes penalties for the inability to distribute W-2 statements to employees by the deadline.

If you e-file your W-2 Forms you don’t need to include the W-3 Transmittal Form. However, if you paper file your W-2 Forms you may be penalized for failing to include your W-3 Form.

You may also face penalties for providing statements that are incomplete or inaccurate. You may be able to avoid penalties if you can show reasonable cause, which is either accepted or rejected by the IRS or SSA. If your failure is proven as willful or as an intentional disregard for the law, the penalties will be higher.

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