Payroll News

IRS Ends W-2 Verification Code Pilot Program

Oct. 1, 2019, 4:35 PM

The Form W-2 verification code pilot program that was started in 2016 was discontinued by the IRS for the 2019 tax year because early reporting deadlines helped improve the process for certifying wage and tax information.

The Internal Revenue Service, which described the program as a success, said the Jan. 31 filing deadline for Forms W-2, Wage and Tax Statement, allowed the agency to more quickly compare the accuracy of information on the W-2 with data on Form 1040, U.S. Individual Tax Return. The PATH Act of 2015 (Pub. L. 114-113) moved up W-2 filings to the Social Security Administration from March 31. The earlier reporting date also helped the IRS fight fraud and identity theft, the agency said Sept. 20.

The 16-character verification code, which appeared in Box 9 of 2018 W-2s, was added so the IRS could authenticate W-2s to the information reported on Forms 1040, U.S. Individual Tax Return.

Box 9 of the 2019 Form W-2 no longer is reserved for the verification code.

An IRS review of the program found that 37.6 million 2018 W-2s had codes included on the form, up about 21% from the previous filing season. About 147.4 million W-2s were processed in the 2019 filing season, with about 13.7 million exact code matches, compared with about 500,000 inexact matches, John Chapman, an official in the IRS return integrity and compliance office, said in May. The number of exact matches was up 34% from the 2018 filing season, he said.

The pilot project, which was voluntary and was used only on electronic tax returns, was a cooperative effort among government agencies, employers, payroll-service providers, computer-software providers, and tax professionals, the IRS said.

The payroll-service providers that participated in the program in 2018 were ADP, Ceridian, Interlogic Outsourcing, Intuit, National Finance Center, Paychex, Paycom, Paycor, Payroll People, PrimePay, and Ultimate Software.

To contact the reporter on this story: Michael Trimarchi in Washington at mtrimarchi@bloombergtax.com

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