What happens if you receive your W-2 and your company made a mistake on your social security number and it’s off by one digit? Being an unscrupulous individual, you sense opportunity! “I don’t have to report my wages from my employer! The IRS won’t be able to match up the wages!”
Of course, when the IRS receives the wage information (forwarded by the Social Security Administration), they’ll notice the mistake and send a letter to the employer. The employer will then check their records, and fix the error (or let the IRS know that their records match the data sent).
So what happens to the employee who doesn’t file? Problems, of course.
First, you did receive the W-2. Second, whether or not you receive a W-2, you are required to file your tax return each year. In fact, there’s even a form for you to use if you don’t get a W-2, Form 4852. And third, if you don’t file, sooner or later the IRS will catch up with you. There is no statute of limitations if you don’t file.
Today the Tax Court decided a case where the petitioner claimed he filed, but the IRS couldn’t find a record of his filing under his social security number, the incorrect SSN used by his employer, or his spouse’s SSN. The numbers didn’t make sense, either. And there was no record of him filing a state tax return. The Tax Court didn’t believe him. And he didn’t spend the $4.42 on certified mail, return receipt requested to prove he mailed his returns.
The court found him liable for his taxes, penalties for failure to file, and failure to make timely estimated payments. In the future, he might just let his employer know about the error and file his returns.