A bipartisan pair of senators has introduced a bill that would require most employers to file their W-2 forms electronically.
Current regulations only require employers who submit more than 250 W-2 forms to submit them in electronic format. For employers submitting less than 250 W-2 forms, current regulations simply encourages the use of electronic filing. The legislation, introduced Thursday by Senators Tom Coburn, R-Okla., and Michael Bennet, D-Col., would direct all employers to take advantage of electronic filing. However, the bill would also allow a hardship exemption for small businesses with five employees or less.
While most forms are submitted to the Social Security Administration electronically, 16 percent (over 33 million) are processed in paper form and manually entered into the agency’s system. The manual process allows for keying errors, and is costly and inefficient, according to the senators. The bill is estimated to save over $11 million annually.
“Requiring the SSA to process hard-copy W-2 forms is outdated and is costing taxpayers millions of dollars each year,” Coburn said in a statement. “When most Americans are using the Internet to do business, failing to modernize this arcane system is irresponsible. This bill is a win-win for the SSA and small businesses across America.”
According to the SSA’s Office of Public Service and Operations Support, in fiscal year 2010—that is, for tax year 2009—it cost approximately $0.34 per paper W-2 and $0.002 per electronic W-2 to process submitted wage reports.
“By bringing this reporting system into the 21st century, we can save taxpayer money and make the process more efficient and accurate,” said Bennet. “This is a great example of the kind of commonsense solutions we can craft to reduce costs and modernize our reporting requirements.”
