Identity theft is running rampant—from social security numbers to credit cards. And now, your W-2.
The Government Accountability Office (GAO) believes they have a solution to cut back on “fraudsters.” To your payroll department’s chagrin, it requires a much earlier W-2 deadline date.
The issue is due to timing. The current W-2 deadline is the last day of February for paper filers and for electronic filers, the last day of March. Personal income tax forms (Form 1040, etc.,) are due normally on April 15. But the IRS doesn’t start reconciling data until July.
During the gap in time from when the IRS issues a refund until they verify data, fraudsters can use stolen identities to file fake returns and receive a refund. Last year over $5 billion with fraudulent returns were dished out.
The GAO’s solution: Reconcile before issuing refunds. In order to process returns quicker, the GAO is recommending a W-2 deadlines as early as January 31 and decreasing e-filing requirements from 250 forms to as low as 5 forms.
Payroll personnel are not happy with this idea. The time allowed to process and correct forms goes from 90 days to as little as 30 days. The potential number of W-2c’s needed to be filed could increase exponentially. And we all know that garbage in, is garbage out.
So is an earlier deadline really a solution? The SSA says go for it. The IRS is sitting on the fence, waiting to see if the “potential corrective action” is worth the cost and important enough to do. Are they saying the $5 billion in fraudulent refunds isn’t worth the time and effort to fix? You decide.