Corrected w-2?

[stannan]

What is the name of your state? Virginia.
Hello. I received amended w-2 covering 2017. I did not believe the numbers that are on them so I started checking my pay slips and deposits. The paperwork I have for 2017 exactly match the W-2 I was given for 2017 but the new amounts on the w-2 are higher by thousands ( 5 digits ) from my pay-slips and the original w-2. Also while the total wages have been increased by thousands the taxes they show paid out changed by only several hundred. I have now been told that the company made a mistake in the years prior to 2017 from 2015 and 2016 and have taken their mistake and added the amount to the w-2 from 2017 since it is too late to submit amended w-2 for '15 and '16. The company itself is no longer in business and stopped being one in early 2019. When I ran the new numbers it would result in me owing thousands of money to the IRS. I am planning on making an appointment with the local IRS office but figured I'd ask here first if they are allowed to pass on that money and should argue the point at my appointment showing my paperwork or just be prepared to pay the extra and hope that I can do it in payments. Thanks.

 

[adjusterjack]

You've come to the right place. A tax attorney participates here and will have some helpful comments, maybe tonight or tomorrow. Check back.

 

[Taxing Matters]

I am planning on making an appointment with the local IRS office but figured I'd ask here first if they are allowed to pass on that money and should argue the point at my appointment showing my paperwork or just be prepared to pay the extra and hope that I can do it in payments. Thanks.

Getting an appointment to discuss this might be difficult to get. The IRS has had its operation severely impacted by covid-19. As far as what to do with the W-2 it all comes down to what you were actually paid. If the payslips and original W-2 were wrong and you actually earned more than that then you may owe additional tax. Without looking at all the documents involved and seeing what changed and what records are available to substantiate the corrected W-2 I cannot say whether there is any change that needs to be made.

However, you can just sit and wait. If you filed that 2017 return on time (on or before 4/17/2018) then the IRS only has until 4/17/2021 to propose any additional assessments to your return. After that, the statute of limitation (SOL) for assessment will have run and there is nothing the IRS can do to assess more tax against you. There are several exceptions that would allow the IRS more time, the most notable being if there was fraud on the return (no limitation), if you understated your income by 25% or more (the SOL becomes 6 years instead of 3) and bankruptcy (the period for assessment is extended by the time you were in bankruptcy + 30 days). In any event, it is when you get the letter from the IRS from that corrected W-2 that you'd really need to respond. If the SOL wasn't so close to expiration then I'd suggest filing an amended return if one was needed to reduce the change of getting hit with a negligence penalty. But again, I don't have enough info here to know if any amended return would be needed in this instance.

 

[davew9128]

However, you can just sit and wait. If you filed that 2017 return on time (on or before 4/17/2018) then the IRS only has until 4/17/2019 to propose any additional assessments to your return. After that, the statute of limitation (SOL) for assessment will have run and there is nothing the IRS can do to assess more tax against you. There are several exceptions that would allow the IRS more time, the most notable being if there was fraud on the return (no limitation), if you understated your income by 25% or more (the SOL becomes 6 years instead of 3) and bankruptcy (the period for assessment is extended by the time you were in bankruptcy + 30 days). In any event, it is when you get the letter from the IRS from that corrected W-2 that you'd really need to respond. If the SOL wasn't so close to expiration then I'd suggest filing an amended return if one was needed to reduce the change of getting hit with a negligence penalty. But again, I don't have enough info here to know if any amended return would be needed in this instance.

I think you need to review your SOL dates here.

Beyond that, I wonder if there are non-cash adjustments to the W-2 that are being corrected. It seems odd that a company out of business would be correcting old W-2s though.

 

[Taxing Matters]

Getting an appointment to discuss this might be difficult to get. The IRS has had its operation severely impacted by covid-19. As far as what to do with the W-2 it all comes down to what you were actually paid. If the payslips and original W-2 were wrong and you actually earned more than that then you may owe additional tax. Without looking at all the documents involved and seeing what changed and what records are available to substantiate the corrected W-2 I cannot say whether there is any change that needs to be made.

However, you can just sit and wait. If you filed that 2017 return on time (on or before 4/17/2018) then the IRS only has until 4/17/2021 to propose any additional assessments to your return. After that, the statute of limitation (SOL) for assessment will have run and there is nothing the IRS can do to assess more tax against you. There are several exceptions that would allow the IRS more time, the most notable being if there was fraud on the return (no limitation), if you understated your income by 25% or more (the SOL becomes 6 years instead of 3) and bankruptcy (the period for assessment is extended by the time you were in bankruptcy + 30 days). In any event, it is when you get the letter from the IRS from that corrected W-2 that you'd really need to respond. If the SOL wasn't so close to expiration then I'd suggest filing an amended return if one was needed to reduce the change of getting hit with a negligence penalty. But again, I don't have enough info here to know if any amended return would be needed in this instance.

 

[Taxing Matters]

I think you need to review your SOL dates here.

Well, the one date, which I have now corrected. Thanks.

It seems odd that a company out of business would be correcting old W-2s though.

Not so odd if the company was a sole proprietorship/single member LLC or partnership and the owner/owners are still around to have responsibility for it.

 

[stannan]

The information I was able to get from a person who is close to the owner of the business is that they are claiming they gave out pay advances in 2016 that they neglected to report or take proper taxes out of so they pushed those amounts onto the 2017 amended w-2. I do know that the senior partner is under investigation and attempted to pass on financial obligations to his deceased junior partner who was in charge of the land survey employees of the company but his estate lawyers won out. I know this because I am very good friends with the deceased partners family. I was only a field crew member on hourly pay. I received no other monies in 2017 except for the checks I have form 2017. As I said the totals on my copies when totaled out for gross wages, taxes paid and net pay all match between my deposit records and the w-2 I originally received. The same can be said I am sure for the yrs 2016 and 2018 and I am confident that if I check other yrs before '16 I will find the same.

 

[stannan]

However, you can just sit and wait. If you filed that 2017 return on time (on or before 4/17/2018) then the IRS only has until 4/17/2021 to propose any additional assessments to your return. After that, the statute of limitation (SOL) for assessment will have run and there is nothing the IRS can do to assess more tax against you. There are several exceptions that would allow the IRS more time, the most notable being if there was fraud on the return (no limitation), if you understated your income by 25% or more (the SOL becomes 6 years instead of 3) and bankruptcy (the period for assessment is extended by the time you were in bankruptcy + 30 days). In any event, it is when you get the letter from the IRS from that corrected W-2 that you'd really need to respond. If the SOL wasn't so close to expiration then I'd suggest filing an amended return if one was needed to reduce the change of getting hit with a negligence penalty. But again, I don't have enough info here to know if any amended return would be needed in this instance.

I always file my returns as soon as I receive all tax information and that usually ends up being in February. The latest I have ever filed was in early March. Am I understanding this correctly that if I just hold off on doing the amended paperwork and don't file even if I owe more money there is nothing that can be done so long as I don't hear anything from the IRS before 4/17/2021? I am currently going over all of my records from 2015 to 2018 up until the date I left the company verifying totals so conceivably it could take a while to go over everything if I don't rush it since rushing things can lead to errors.

 

[LdiJ]

I always file my returns as soon as I receive all tax information and that usually ends up being in February. The latest I have ever filed was in early March. Am I understanding this correctly that if I just hold off on doing the amended paperwork and don't file even if I owe more money there is nothing that can be done so long as I don't hear anything from the IRS before 4/17/2021? I am currently going over all of my records from 2015 to 2018 up until the date I left the company verifying totals so conceivably it could take a while to go over everything if I don't rush it since rushing things can lead to errors.

The IRS is very behind in dealing with their mail. The envelope containing the corrected W2s might not even get opened by the IRS before 4/17/2021. I personally think that it was improper for them to put that money on a corrected 2017 return. If it was paid in 2016 it belongs on a corrected 2016 return.

 

[davew9128]

I personally think that it was improper for them to put that money on a corrected 2017 return. If it was paid in 2016 it belongs on a corrected 2016 return.

You're 100% correct but its not unusual for small businesses to include the 1st pay of the following year on the W-2 even though not paid, so as to accelerate the deduction on their own business return. Totally improper but still happens. Happened to me in college at a pizza shop I worked at.

 

[LdiJ]

You're 100% correct but its not unusual for small businesses to include the 1st pay of the following year on the W-2 even though not paid, so as to accelerate the deduction on their own business return. Totally improper but still happens. Happened to me in college at a pizza shop I worked at.

Still though, this is something that they are doing almost four years after the fact, with no guarantee that they didn't actually include that income on the original 2016 return. However, it does look like the OP can prove what his real income was for 2017, so even if the IRS does come after him, he can prove that the corrected W2 is wrong.

 

[stannan]

Thank you everyone for the help. I am trying to get copies of canceled checks from the company. Its now closed so it is taking some time. If they claim they paid me an extra 20k in 2017 they should have the canceled checks that I endorsed and either cashed or deposited. I will also wait and hopefully wont hear from the IRS before April 15th 2021 and will be free of doing anything about the 2017 amended w-2. They also sent an amended w-2 for 2018. I am currently going over all that information also. They let everyone go in Sept of 2018 and closed the doors for good in 2019. Wish me luck. I may need it. Thanks again.