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W-2 verification: help the IRS fight fraud

W-2 verification, fraud, IRS, tax, refundIn its continuing effort to fight tax refund fraud, the IRS is asking taxpayers and tax preparers to assist by using the new 16-digit W-2 verification code.

If your 2017 Form W-2 includes a 16-digit verification code, IRS encourages you to enter it when prompted if using software to prepare your return. In addition, the IRS is instructing tax preparers to enter the verification code during the tax preparation process.

The IRS says the use of the W-2 Verification Code is a way to validate the wage and tax withholding information on the W-2. For taxpayers, taking a moment to add this code when filling out their taxes helps the IRS authenticate the information. This in turn helps protect against identity theft and additional refund delays.

For 2017, the IRS and its partners in the payroll service provider industry will place the code on 50 million Forms W-2. This is up from two million forms in 2016.

If the code is not included, the IRS states your tax return will still be accepted. However, initial results indicate the verification code shows promise in reducing tax fraud. It helps IRS processing systems authenticate the real taxpayer. Identity thieves sometimes file false Forms W-2 to support their fraudulent tax returns.

This initiative will affect only those Forms W-2 prepared by payroll service providers. The verification code’s location on the form will vary. Enter the code on electronically filed returns only. Most software providers will prompt you to enter the code.

Want additional information on what the IRS is doing and how you can take actions to protect your personal and financial data? Visit Taxes. Security. Together.

Melinda Nelson, CPA