IRS to require manual entry of Taxpayer Identification Numbers on W-2 forms
by AccountingWEB on
By Ken Berry
It just got harder for some payroll departments to report tax return information.
The Internal Revenue Service has announced on its Web site that it is requiring employers to manually enter Taxpayer Identification Numbers (TINs) on Forms W-2 for all taxpayers with Individual Taxpayer Identification Numbers (ITINs) who report wages. The requirement is effective for the 2011 tax year.
No software package should use an auto-population feature, regardless of the presence of an override feature, to populate the TINs on Forms W-2 for ITIN filers. Failure to comply with the new rules could result in a written reprimand, suspension, or even expulsion from the e-filing program. The IRS has cited Rev. Proc. 2007-40 as authority for taking such actions.
The change is part of ongoing IRS efforts to crack down on taxpayer and tax return preparer fraud. In the past, the IRS has used ITINs to help ferret out tax cheaters.
An ITIN is a 9-digit number that always begins with 9 and has a range of 70-88 in the fourth and fifth digits. Effective April 12, 2011, the range was extended to include 90-92 and 94-99 in the fourth and fifth digits. The IRS issues ITINs to individuals who are required to have a TIN, but who do not have, and are not eligible to obtain, a Social Security number.
The new IRS announcement, which has largely flown under the radar, could gum up the works for W-2 issuers. Steven Hoffman, a speaker and former IRS agent who often comments on tax compliance issues, foresees major problems: "I think this is going to cause the payroll departments a headache . . . it will be difficult to stop the automated process of placing this number on the W-2. It might be wise to consult with your IT department now, and if you use outside software to prepare your W-2s, you should ensure that this doesn't happen either. The penalty looks severe."
Read the IRS announcement. (third item down).
You may like these other stories...
Could the IRS disallow Ice Bucket Challenge charitable contributions?Unless you’ve been living under a rock, you’ve probably heard of – or participated in – the ALS Ice Bucket Challenge.I was...
As a general rule, a taxpayer can deduct the full amount of monetary contributions made to a qualified charitable organization, as long as certain substantiation requirements are met. These donations are typically made...
Hertz withdraws full-year forecast, cites accounting review, challengesRental car company Hertz Global Holdings Inc. said on Tuesday it is withdrawing its full-year financial forecast and expects 2014 results to be “...
Upcoming CPE Webinars
This webcast will include discussions of recently issued, commonly-applicable Accounting Standards Updates for non-public, non-governmental entities.
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.