The IRS and payroll firms are reminding tax preparers about a verification code being added this tax season to 50 million W-2s as part of a test to fight fraud and protect businesses and taxpayers from ID theft.
Preparers can look for the code on W-2s and enter the 16 digits when prompted while filing electronic returns. Tax professionals are urged to look for “Verification Code” on W-2s because location will vary.
For the purposes of the test, omitted and incorrect verification codes will not delay the processing of a return. The code will not be included in W-2 or W-2 data submitted by the PSPs to the Social Security Administration or any state or local departments of revenue, nor will this pilot affect state and local income tax returns or paper federal returns.
This ongoing initiative aims to verify the authenticity of W-2 data submitted by taxpayers on e-filed individual returns. The IRS has partnered with certain payroll service providers to include a 16-digit code and a new Verification Code field on a limited number of W-2 copies provided to employees.
Verification codes will appear on approximately 50 million Forms W-2 in 2017, up from the 2 million forms in 2016.
The code will be displayed in four groups of four alphanumeric characters, separated by hyphens: XXXX-XXXX-XXXX-XXXX.
The code will appear on some versions of payroll firms’ W-2 copies B and C, in a separate, labeled box (Copy B is “To be filed with employee’s federal tax return” and Copy C is “For employee's records.”)
Jeff Stimpson is a veteran freelance journalist who previously served as editor of The Practical Accountant.