With tax season in full swing, employers should know what could happen if they fail to file and mail W-2 forms. They could face hefty financial and legal repercussions. Businesses have an obligation to mail out W2 forms to their employees no later than January 31 for taxes. They must also file paperwork themselves. If a company fails to do so, there can be some consequences:

Possible Infractions:

Employers who don’t file the paperwork by the last day of February, or April 2 if they e-file, can suffer penalties. If the information is incorrect, such as the taxpayer ID number, surname or dollar amounts, they can be penalized as well.

Penalties for Large Businesses:

Businesses with gross annual receipts over $5 million will be subject to heavier penalties. For every w-2 where a correction is made within 30 days of the due date, the penalty is $30, with a $250,000 yearly maximum. If filing after March 30, but on or before August 1, the fine is $60 for each W-2 with a $500,000 yearly maximum. If they fail to file at all, or later than August 1, they must pay $100 for each W-2 with a yearly maximum of $1,500,000.

Penalties for Small Businesses:

Companies with average gross receipts no great than $5 million for the last three previous tax years are considered small businesses by the IRS. The maximum annual penalty for these companies for filing less than one month late is $75,000. For filing late, but by August 1 it increases to $200,000 and after August 1 it is $500,000.

Employee Copies:

If these statements are late, the company must pay the same fines as late or incorrect forms, as stated above. This is in addition to the penalty for not filing correctly with the Social Security Administration.

Extensions and Exceptions:

Requesting a 30 day extension is easy. Companies just need to file Form 8809 with the Social Security Administration. Also, if a minor error is made on a form, but does not prevent it from being processed, the employer is exempt from penalties.

Disregard and Fraud:

If a business intentionally fails to file correct W-2, they are subject to a minimum penalty of $250 per government copy and $250 per employee copy withheld. There is no maximum. If an employer intentionally files false W-2 forms on someone’s account, that person can sue for $5,000 or more in damages.

To avoid legal ramifications and large fines, make sure tax forms are sent out accurately and on time!