The IRS requires all employers to report income and employment taxes withheld from their employees on an Employer’s Quarterly Federal Tax Return (Form 941).
If your employer fails to report your wages accurately or at all, they may be subject to criminal and civil sanctions as outlined by the IRS, and you do have the right to report them.
When a Company Fails to Report Income and Taxes to the IRS
The IRS recommends that employees who are concerned that their employer is not reporting their income or withholding taxes, should report the situation as soon as possible. Tax evasion is a serious crime and the employee is still responsible for paying income tax on the wages earned during the tax year.
You can call the IRS at 1-800-829-1040 to file an official report.
Remember that failure to report your wages and taxes to the IRS accurately means you could end up missing out on important benefits, including unemployment benefits, social security benefits and Medicare.
When your wages aren’t reported, they are not added to your “lifetime total” of earnings which means you may not be eligible to receive certain types of benefits upon retirement.
Make sure you review all of your pay stubs so that you have an accurate figure of the actual income earned.
You may need to provide proof of income if and when the IRS investigates the situation further. You need to be proactive and make sure the IRS knows exactly how much you earned during the year, and confirm that all taxes have been paid.
When a Company Fails to Send You a W-2
A W-2 statement is a form issued by an employer to an employee that reports the employee’s wages and taxes withheld for the year. It is important to receive a W2 statement from your employer each year, as it serves as proof of income when filing taxes with the Internal Revenue Service (IRS). If your employer does not report your wages to the IRS, then you will not receive a W2 statement.
If the employer simply forgot to send you a W-2, they may still have withheld employment taxes but have not deposited them to the appropriate account. In this situation, you will need to request a W-2 and make sure that you are reporting all information accurately on your own Federal Income Tax Return. Add up all of your pay stubs for the year to make sure you are reporting an accurate figure and are paying the taxes you really owe.
Here is an article if you need help with understanding the information shown on your W-2
You can also file an anonymous report against your employer. Form 3949-A can be completed online or by mail, and is designed to report suspected tax fraud activity. In this form, you will need to provide extensive details about the situation, including the name and address of the employer, your Social Security number, a description of the violation, the estimated dollar amount of any unreported income, and other contact information.
Your employer legally has until January 31st as a deadline to send out your W–2 — meaning that’s the date by which they are required to put W–2 statements in the mail. That deadline can change if January 31 falls on a weekend. If so, the deadline is the following Monday for employers to issue W–2 forms.
So if you don’t receive your W2 by early February, reach out to your employer and ask if the form has been sent.
Also, many people ask: “Can I sue my employer if they don’t give me my W–2 on time?”
The short answer is: No, you can’t. Even if they don’t send you a W2 at all, that doesn’t mean they didn’t actually send mandatory taxes to the IRS after withholding taxes from your paychecks.
If they did fail to send taxes to Uncle Sam, and you have direct knowledge about that, then your best bet is to report them to the IRS. The federal government will likely be way rougher on this kind of rogue employer and will squeeze them a lot harder than you can with a lawsuit.
If you suspect tax fraud, read this advice from the IRS’s website.
