W-3 Form

What Is the IRS Form W-3?

IRS Form W-3, or the “Transmittal of Wage and Tax Statements,” is an annual taxation form mandatory for employers to submit, mentioning the total income, Medicare and Social Security taxes, and other withheld benefits of the employees currently employed in the company.

The employer must submit the form to the Internal Revenue Service (IRS) and the Social Security Administration (SSA) along with the W-2 Forms of employees.

What Information Should an Employer Include in the W-3 Form?

The W-3 Form is an official document summarizing the company’s employees’ data. Employers must include the following:

• The company name and address
• Employer Identification Number (EIN) and contact details
• Salary including benefits, compensation, and tips
• Total withheld Social Security, Medicare, state, and federal taxes
• Dependent care benefits
• Retirement plans
• Non-qualified plans

Who Must File the W-3 Form?

Employers who file more than one W-2 Form must also submit the Tax Form W-3 to the Social Security Administration (SSA). Usually, the IRS requires most U.S. businesses to fill out both forms.

To explain it more clearly, employers must file the W-3 Form if they:

1. Gave an employee at least $600 as salary for the previous tax year, even if Income Tax, Medicare, and Security Social Taxes weren’t withheld.
2. Deducted any benefits, wages, Medicare, or Social Security Taxes.

Why Must Employers Submit the IRS W-3 Form?

The IRS and the SSA require employers to submit the W-3 Form because they can accurately track the data of all salary, Income Taxes, and FICA Taxes that employers withhold from the employee.

The SSA and the IRS compare the W-2 Forms with the W-3 Form to officially register a company's and its employees' correct information. It also helps to calculate the annual taxes.

What Are the Ways to Submit the W-3 Form?

The employer can easily file the W-3 Form online or by mail to the IRS. The SSA and IRS strongly support using online software to fill out the form as they are trying to move away from paper-based submissions. 

till, here are the three ways an employer can submit the W-3 Form:

1. Mailing the W-3 Form and the W-2 Forms directly to the SSA and the IRS. 
2. Using tax or payroll software.
3. Using Business Services Online (BSO) to fill out forms and submit them electronically.

When is the Due Date for Submitting the Form W-3?

All employers need to submit the W-3 Form for their company annually along with copies of Form W-2. So that makes the deadline January 31.

Are There Penalties for Failing to Submit the W-3 Form on Time?

The Internal Revenue Service (IRS) strictly maintains the form submission deadline and charges a hefty penalty for failing to comply.

Failure to submit the W-2 and the W-3 Forms by the deadline will result in a fine of $50 for each W-2 Form. The annual penalty is a maximum of $187,500 for small enterprises and $536,000 for larger companies. The IRS defines “small companies” as those whose gross total remains under five million dollars.

If the company submits the form within 30 days after the deadline, the fine will increase to $100 per form, which is estimated to be $536,000 for small companies and $1,609,000 for larger companies.

The annual penalties will slowly increase to $1,072,500 for small enterprises and $3,218,500 for larger companies if the forms have not been filed by August 1.