Early reporting replaces Form W-2 Verification Code; IRS thanks all participants

Because of new wage and income reporting requirements, the IRS announced it would discontinue the Form W-2 Verification Code pilot for the 2019 tax year. Federal law now requires employers to submit Forms W-2 by January 31 each year, which helps the IRS combat fraud and identity theft and superseded the need for a verification code.

The Form W-2 Verification Code marked an unprecedented cooperative effort between payroll service providers, employers, tax software providers, tax professionals, the Social Security Administration and the IRS to identify new avenues to ensure the accuracy of information reported on tax returns and to identify fraudulent tax returns.

A new “verification code” box was added to official and substitute Forms W-2, and a 16-digit code served to verify the Form W-2 to the information reported on the Form 1040. The pilot project was voluntary and appeared only on electronic tax returns.

The verification code “test and learn” project proved successful, but Congress also passed the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) which required employers to speed up their wage and income filings to the Social Security Administration. The reporting deadline was March 31. The new January 31 deadline enables the IRS to more quickly verify information on the Form W-2 to information on the Form 1040.

The IRS expresses its appreciation to the many stakeholders, especially the payroll service providers and industry software developers, who joined in the verification code project.