Hand Done W-2

[erchess]

I have my first hand done W-2 of the season and I wonder other than checking the box that it's a nonstandard W-2 what else do I have to do besides advise the client that the part of the refund based on withholding will not arrive before June at the very earliest? I have absolute faith in the accuracy of the W-2 because I did the 1120S for the business that generated it and among the things I had was the payroll report which was done entirely by hand. This is the owner's W-2 and she took virtually the entire profit per books as pay for being the manager. The books were kept by an 80 plus year old lady who only knows how to work by hand and who I believe has no other clients. She treated herself and everyone else as employees - there were no contractors other than professional companies engaged for various reasons.

I have a good relationship with this company and if I tell them I need to re prepare and resubmit the payroll on a computer they will pay my fee for doing so without question. Is there justification for my doing that even if the numbers would not change?

[taxea]

I get one every year for a client that is an IC hairdresser. The owner probably is not computer literate and as long as there are people out there that don't use a computer the IRS is going to
have to accept handwritten documents.
I don't understand businesses that assume everyone has or uses or knows how to use a computer. I think it is unfair to make that assumption.
My mom is 88, owns 10 rentals and refuses to learn how to computerize everything. She keeps her own books and does her own taxes...all by hand. And she knows what she is doing.

[RitaB]

Really?

I have my first hand done W-2 of the season and I wonder other than checking the box that it's a nonstandard W-2 what else do I have to do besides advise the client that the part of the refund based on withholding will not arrive before June at the very earliest?

I did a return with a handwritten W-2, and their refund was not delayed at all.

[Koss]

Resubmit the payroll??

I don't think that's a good idea at all. If none of the numbers are changing, then it doesn't make sense to do an amended 941 or an amended W-2 (or the 1096, or whatever that "cover sheet" is called). And you certainly shouldn't submit a duplicate original return.

As Rita noted above, I don't think there is any type of automatic delay on the refund just because you check the "nonstandard" box.

In certain cases, especially if there is EIC involved, the IRS will delay or freeze a refund, if they suspect real fraud. And one type of real fraud is bogus Forms W-2. So the nonstandard box can in fact trigger some unintended consequences, but it's not automatic.

I think the entire return gets evaluated, somehow, and scored... and I'm not talking about the DIF score that is used to select returns for examination. I'm talking about badges of fraud.

If a nonstandard W-2 is the only red flag, and there is no EIC, and everything else checks out, there may be no delay at all.

In your context, I think some tax pros might not even check the nonstandard box.

I tend to be a stickler about e-file program rules. So I would probably check the box. But I wouldn't argue the point if someone took the position that based on personal knowledge, they felt that they had the discretion to not check the box.

Refund fraud has gotten so sophisticated these days that handwritten Forms W-2 are rarely fraudulent. It sounds silly until you think about it for a minute. Those who are serious about refund fraud are using software to generate the bogus Forms W-2. They know that the handwritten form is a red flag.

In the fact pattern presented in the original post, what if you redid the payroll using professional software, just to generate a professional Form W-2, but did not actually file anything, since it was already filed by the taxpayer? Like I said earlier, I just can't see a valid reason to re-file Form W-2 or any of the related documents.

But if you redo the taxpayer's work... say, just to check it for accuracy, or as a presentation in order to sell your payroll services, so the client can see what your work product looks like...

Well... wouldn't you then have a computer generated Form W-2, so you wouldn't have to check the box?

If you didn't have the client's 1120S, I would never even suggest such a thing. But let's get real here. You know the form is valid, and the IRS will never know the difference.

BMK

[Gary2]

Indeed, I believe there's no requirement that the W-2 copy furnished to the employee be a physical match for the one filed with the SSA. Thus a person who has software capable of generating a print W-2 suitable for providing to employees, but not suitable for filing (because of the weird red-color scanning requirements), could give the employee a standard W-2, while the SSA gets a non-standard one.

And the e-file will be marked standard, since the preparer has no way of knowing how it was filed with the SSA.

[erchess]

Eic

will most definitely be in play for the taxpayer and I think one child. Does that change anyone's advice?

[Burke]

And the e-file will be marked standard, since the preparer has no way of knowing how it was filed with the SSA.

If its a handwritten carbon copy, the preparer would know. I just did one and marked it non-standard. The poor guy screws up the FICA amts every year. He owes the employee $81 by my calcs. But I have never known it to delay his refund.