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IRS adding W-2 verification code

Posted on Tuesday, January 10, 2017 by Gary Hunt

OSCPA staff report

Our story last month that the Ohio Department of Taxation will require a driver’s license or state ID number on electronic returns drew a strong response from readers, several of whom lamented the addition of one more step to a complex process.

Now comes another step – again in the name of security: Form W-2s this year will include a 16-digit verification code.

The code will be used to validate the wage and tax withholding information on the form. Taxpayers and practitioners will need to add the code on returns filed electronically. This, the IRS says, will “help protect against identity theft and unnecessary refund delays.”

Only W-2s prepared by payroll service providers will be impacted. For 2017, the IRS and payroll service providers will place the code on 50 million Forms W-2 – up from two million forms in 2016. The code’s location on the form will vary.

If the code is not included on an electronic return, the IRS said it will still accept returns but including it will help the agency authenticate the taxpayer more quickly.

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