Employer Reporting Improvement Act (HR 3801): An Overview
The Employer Reporting Improvement Act (HR 3801) is a bill introduced in the United States House of Representatives on 2023-06-29 by Representative Derek Kilmer (D-WA). The bill seeks to improve the accuracy and efficiency of employer reporting on employee benefits and taxes.
Key Provisions of the Bill
- Codifies existing guidance on Form W-2 reporting: The bill codifies existing guidance issued by the Internal Revenue Service (IRS) and the Social Security Administration (SSA) on the reporting of employee wages, taxes, and other benefits on Form W-2. This clarification aims to improve compliance with reporting requirements and reduce errors.
- Requires electronic reporting for certain employers: The bill mandates that employers with 250 or more employees file Forms W-2 electronically with the IRS and SSA. This requirement aims to streamline the reporting process, improve data accuracy, and facilitate compliance audits.
- Extends the filing deadline for Form W-2: The bill extends the filing deadline for Forms W-2 from January 31st to March 15th. This extension is intended to provide employers with additional time to gather and verify employee information, reducing the risk of errors and penalties.
- Provides funding for the IRS and SSA: The bill allocates funding to the IRS and SSA to implement and enforce the improved reporting requirements. These funds would be used to upgrade systems, hire additional staff, and conduct outreach programs.
Rationale for the Bill
The Employer Reporting Improvement Act is proposed to address several challenges related to employer reporting on employee benefits and taxes:
- Inaccurate and missing information: Despite existing reporting requirements, some employers fail to provide complete and accurate information on Forms W-2, leading to errors and refund delays for taxpayers.
- Administrative burdens: The current manual filing process for Forms W-2 can be time-consuming and prone to errors, creating unnecessary burdens for employers.
- Tax compliance challenges: Inaccurate or incomplete reporting can lead to compliance issues for both employers and employees, resulting in penalties and audits.
Impact of the Bill
If passed, the Employer Reporting Improvement Act would:
- Improve the accuracy and completeness of Form W-2 reporting by employers, reducing errors and refund delays.
- Streamline the reporting process by requiring electronic filing for larger employers, increasing efficiency and reducing administrative burdens.
- Extend the Form W-2 filing deadline, providing employers with more time to gather employee information and minimize errors.
- Enhance tax compliance by providing additional funding for the IRS and SSA to enforce reporting requirements and conduct audits.
Current Status of the Bill
As of December 13, 2024, HR 3801 has been referred to the House Committee on Ways and Means. The bill has not yet been scheduled for a hearing or vote in the committee.
Conclusion
The Employer Reporting Improvement Act aims to improve the accuracy and efficiency of employer reporting on employee benefits and taxes. By codifying existing guidance, requiring electronic filing, extending the filing deadline, and providing funding for enforcement, the bill seeks to reduce errors, streamline compliance, and enhance overall tax administration. The bill is currently under consideration by Congress, and its potential impact on employers and taxpayers will depend on its progression through the legislative process.
H.R. 3801 (ENR) – Employer Reporting Improvement Act
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