W-2 Form Electronic Delivery
Q: Are employers permitted to deliver W-2s electronically to their employees? If so, what are the requirements?
A:Yes, employers may deliver W-2 forms electronically. The Internal Revenue Service (IRS) published final regulations in February of 2004 that allow employers to provide W-2 forms in an electronic (instead of a paper) format.
The benefits of electronic W-2 statements are:
- Earlier access.
- Once received electronically, significantly less possibility that the W-2 may be lost or stolen.
- Access is possible electronically if the employee is away from his/her usual home or work location.
- Compensation and tax-withholding information may easily be downloaded into many tax preparation software programs.
In addition, depending on the number of employees it has, a company can realize a significant cost savings from eliminating the paper forms, envelopes, and distribution and postage costs.
Employers must comply with the specific IRS regulations to use electronic W-2s and employees must provide their consent to receive an electronic W-2, instead of a paper copy. Before or at the time of consent, the employer must give the following information to employees:
- The scope and duration of the consent, the right, and procedures to follow to withdraw consent.
- Assurance that employees who do not provide consent will receive a paper W-2.
On or before Jan. 31, employees will be given details on how to retrieve their electronic statement. Access to the electronic W-2 will be maintained through Oct. 15 of the year following the calendar year of the W-2 or for any period longer than what the IRS requires.
As required by the IRS, this consent must be made electronically in a manner that reasonably demonstrates that the employee can access the W-2 in the electronic format in which it will be provided. As an alternative, the consent may be made via e-mail or via a paper authorization if it is confirmed electronically in a manner that demonstrates the employee's ability to access the electronic statement. The final regulations allow an employer to treat a request for a paper statement as a withdrawal of consent. Also, if the withdrawal of consent is received before a statement is furnished electronically, the employer must provide the statement in paper format.
If the employer changes the hardware or software used for electronic W-2 delivery, it must inform employees and obtain a new consent if the change may result in employees not accessing the electronic statement. In addition, employees must be notified of the posting of any corrected W-2 statement within 30 days of the new posting and must provide the form in paper format by mail or in person within 30 days if an electronic statement is returned as undeliverable and the employer has been unable to correct the electronic delivery.
Employees who have completed the electronic consent procedures must also receive an e-mail notification no later than Jan. 31 with the subject line “Important Tax Return Document Available.”
Article by Diane Lacy, SPHR, is an HR Knowledge Advisor in SHRM's HR Knowledge Center from http://www.shrm.org/kc/solutions/articles/archives/CMS_025205.asp#P-8_0