GAO makes recommendations to IRS for Rooting out issues

 

The IRS has been emphasizing the importance of preventing identity theft and fraud for quite some time now, particularly when it comes to Form W-2.

 

As a way to prevent fraud, the IRS has made it a priority to verify the info reported on W-2s after submissions.

 

This effort will likely increase, based on some recent recommendations made to the agency by the Government Accountability Office (GAO).

 

Here’s how these recommendations would impact Payroll:

 

Late filing scrutiny

 

You already know that it’s critical to meet the Jan. 31 deadline for filing W-2s, but it may become even more important since the GAO is encouraging the IRS to crack down on late returns.

 

The GAO wants the IRS to review the notices it sends to late filers of W-2s to see how closely missed deadlines are related to noncompliant returns and fraud.

 

It also want the agency to more proactive about collecting penalties for late W-2s, suggesting that the IRS send out penalty notices as early as possible before the next filing deadline.

 

Compliance checks

 

Additionally, W-2 issues may impact the timing of employee’s refunds.

 

The IRS has already launched an initiative to hold refunds for taxpayers claiming certain credits until Feb 15.

 

The GAO wants the IRS to take a closer look at this process to make sure fraudulent refunds aren’t being released after the hold expires. This includes analyzing the benefits and drawbacks of the refund hold, such as its burden on taxpayers.

 

Modifying the process may be necessary to make it more effective at preventing fraud. That could mean delaying refunds even longer.

 

One change that could cause this delay: The GAO says the IRS should review submitted W-2 data to see if there’s any way for the agency to start preforming “pre-refund compliance checks” to root out issues such as underreporting and employment fraud before releasing refunds.

 

If the IRS starts closely scrutinizing W-2s as part of its pre-refund verification process, that’ll make it even more necessary to double check that info listed on employee’s W-2s is accurate before submission.

 

More info: bit.ly/w2550