For filing season 2018, the Internal Revenue Service has expanded the pilot to verify the authenticity of Form W-2 data. This initiative is one in a series of steps implemented by the Security Summit to combat tax-related identity theft and refund fraud.
The objective is to verify Form W-2 data submitted by taxpayers on e-filed individual tax returns. The IRS has partnered with certain payroll service providers (PSPs) to include a 16-character verification code on many Forms W-2 provided to employees.
Here’s what’s new for 2018:
- Verification codes will appear on more than 60 million tax year 2017 Forms W-2. That’s nearly one out of every four Forms W-2.
- A Form W-2 with a verification code will display it in box 9, newly labeled “Verification Code.”
- A Form W-2 without a verification code may include a blank box 9 or no box 9 at all.
As in previous years:
- The verification code will be displayed in four groups of four alphanumeric characters, separated by hyphens. Example: XXXX-XXXX-XXXX-XXXX.
- The only valid characters are the letters A-F and the numerals 0-9.
- The verification code will appear on Form W-2 copies B ("To be filed with employee's federal tax return") and C ("For employee's records").
- Taxpayers without a verification code on their Form(s) W-2 may leave the verification code box blank in their tax software product.
Taxpayers and tax professionals are urged to enter the verification code when prompted by software, as it can speed the processing of the return and the issuance of the refund. However, omitted and incorrect verification codes will not delay the processing of a tax return.
The form will include these instructions to taxpayers and tax preparers: “Box 9. If you are e-filing and if there is a code in this box, enter it when prompted by your software. This code assists the IRS in validating the W-2 data submitted with your return. The code is not entered on paper-filed returns.”
The verification code will not be included in Forms 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.