A civil penalty is a fine imposed by the Internal Revenue Service on taxpayers who fail to abide by certain regulations. In our experience, this is unintentional. While there are many reasons penalties may be imposed, the most common one we deal with is Failure to File W2 and W3 Forms.
When a business chooses to prepare their payroll internally without the expertise of a payroll service, this creates a huge risk for the business. The business owner relies on internal staff who may not have the proper training or understand the compliance issues at stake. Since compliance is a major component of payroll, it is our belief that you are better served to outsource your payroll functions.
As a reminder, employees must receive their W2 forms for the previous tax year by January 31. If you fail to submit these forms by the deadline, your business will be assessed a penalty. Penalties range from $50 per form if you file within 30 days of the due date, $100 per form if you file between March 1 and August 1, or $260 per form if you file after August 1.
Keep in mind that if you are responsible for filing more than 250 W2 and W3 forms, they must be e-filed. As a business owner, you are responsible for filing forms on time even if you rely on a payroll company to complete this function. If you receive any notice from the IRS, please share it with us. We will help assess the situation and properly advise you on how the matter should be handled. FRSCPA will work hard to provide a resolution.