Every year payroll professionals receive requests for a duplicate Form W-2 from their employees. The reasons are as varied as the employees and payroll has heard them all. Everything from "I just noticed that you have my wrong address and I moved six months ago," or "I put it in my pocket and forgot to take it out before I washed my pants" to "I didn’t know that was my W-2 and threw it out." But one thing is also for certain and that is the number of myths and urban legends that have sprung up around the reissuing of the form and how employees accept these myths as simple fact. To dispel these myths and urban legends, let’s examine some of the more common ones that have surfaced over the years and see if they are the truth, a half-truth, or just plain false.

Myth 1: Employers must issue the duplicate W-2 immediately upon receiving a request from an employee.|

The Facts: False. This is technically false from an IRS regulation standpoint. However, it is advisable to do just that from a best practice and a customer service standpoint. The Internal Revenue Service does not give specific regulations for the timing of reissuing duplicate forms. In the Tax Tip 2009-28, What to Do If You Are Missing a W-2, the IRS advises employees to "allow a reasonable amount of time for [the employer] to resend or to issue the W-2." But it furnishes no definition of "a reasonable amount of time" for payroll to follow. It does not state one day, two days, or even two weeks. In the past, the IRS has deemed that six weeks is considered a reasonable amount of time but that has not been specifically applied to duplicate Forms W-2. It is simply left up to the individual payroll department or employer.

However, even if a great deal of leeway is allowed it is best to avoid the passage of too many days from the date of the request until the issuance of the duplicate form. The longer the employee has to wait, the more trouble or inconvenience can be caused. And that may not be worth the extra few days of processing time that were gained.

When an employee does not receive their Form W-2 the IRS urges the employee to contact the employer and request a duplicate form. It also counsels employees to wait until at least Feb. 17 before even asking for a duplicate. This informs payroll that they do not have to begin reissuing forms until at least Feb. 17. In that area payroll does have a date to work from.

If the employee has indeed waited until after Feb. 17, made a request for the duplicate and allowed a reasonable time for the duplicate to be created and mailed, then the employee is instructed to call the IRS directly if Form W-2 is not received. Once this call is made the IRS will intercede on behalf of the employee or "go to bat for them" with the employer, contacting the employer directly to request the duplicate form.

Since the employees have this limited recourse to request the form from the IRS, it is imperative that they understand when duplicates will be issued. Though no penalties, etc., are assessed if the employee does request the IRS to intercede for a duplicate, the results of such a request are increased paperwork for the payroll department to the IRS and unneeded and unwanted interference in the process of issuing duplicate forms.

Myth 2: Employers are forbidden by IRS regulations from charging a fee to process a request for a duplicate Form W-2.

The Facts: False. The IRS permits employers to charge a fee for reissuing the form. The IRS states emphatically in their instructions for Form W-2 that "Employers are not prohibited (by the Internal Revenue Code) from charging a fee for the issuance of a duplicate Form W-2."

However, it is best if charges for duplicate forms are stated up front in your procedures rather than as an afterthought once a duplicate is requested. This will prevent misunderstandings by employees who may have heard this myth and are under the impression that fees are not permitted.

It is also not restricted on which employees are charged a fee and which are not. Again this is subject to your payroll policy. As long as the distinction of who is or who is not charged is not based on any criteria that can be traced back to a protected group such as race, creed, color, religion, sex, place of birth, or national origin it will be acceptable. It is becoming common to assess a fee if the employee did not receive the form due to their own inaction such as failing to update their address after a move. A fee is not assessed if the form indeed was "lost in the mail." You should not charge a fee to only employees who live in a certain state or city.

How much of a fee to charge is another area of discussion. If you are using an outside vendor, then the common practice is to charge the fee the vendor charges for the duplicate. Again the IRS only states nominal as the limitation.

Myth 3: Employers are not permitted to require employees to use and accept electronic duplicate Forms W-2 if the employee does not give written permission in advance.

The Facts: False. The IRS regulates only the method of distributing the initial or first copy of Form W-2 to employees. That form must be on paper unless the employee completes an arduous approval or consent and disclosure process. However, since the IRS has no such requirements for duplicate forms, employers can use electronic versions of the form without getting any consent from the employee in advance. The payroll department can simply send the W-2 file to the vendor and all requests for duplicates are directed to either their call center or their Web site.

Myth 4: Employers may make three photocopies of the employer’s copy (Copy D) of the W-2 and give them to the employee.

The Facts: False. When issued duplicate copies of Form W-2, employees must receive an exact copy of what was originally issued in order to file their tax returns. Employees are given copies B, C, and 2 in the initial Form W-2. They must receive these same copies when issued a duplicate form. Simply copying the employer’s copy (Copy D) does not fulfill that requirement.

Myth 5: Employers must stamp or write "reissued statement" on the duplicate Form W-2.

The Facts: True. The IRS requires the new copy to have "reissued statement" noted on it. This applies to copies of paper forms or retyped statements. It also applies to paper copies of electronic forms. However, if the original Form W-2 was issued electronically and the duplicate will also be issued electronically then the payroll department does not need to insert "reissued statement" on the form.

Myth 6: Employers may not place any restrictions on how employees request a duplicate Form W-2.

The Facts: False. The IRS has no regulations on how a duplicate form can or must be requested and, again, referring to IRS Tax Tip 2009-28, What to Do If You Are Missing a W-2, it simply advises the employee to "contact your employer." And it does not put any restrictions either on how an employer must accept the request. Here, too, the IRS will look at reasonable. If the employer requests that the employee complete a "Request for Duplicate Form W-2" form, that would not be unreasonable. The employer must, however, make this request form readily available to the employee via fax, mail, the Internet, e-mail, or in person, and must also be willing to receive this form from the employee via mail, fax, e-mail, or in person.

Myth 7: The employer may not demand or require proof of identification before issuing a duplicate Form W-2.

The Facts: False. Nowhere in the IRS regulations does it require that employers submit sensitive documentation to anyone who requests it. The IRS requires that the initial Form W-2 be furnished to the employee. Mailing the form is a common practice but has never been the required method of distribution. Therefore the employer is not expected to mail a duplicate of the same form without verifying the person making the request. In fact, it is accepted premise in this day and age of identity theft and stalking that someone other than the employee may try to request or intercept this document. So this precaution would not be unreasonable.

The myths and urban legends surrounding duplicate Forms W-2 confuse employees and cause concern for payroll departments. By getting the truth about reissuing the form out to employees early in January, payroll departments can help themselves by making this year-end task smoother and more efficient.

This article was originally published in IOMA's monthly newsletter, 'Payroll Practitioner's Monthly', and is republished here with the express written permission of IOMA, Copyright(c) 2009. For more information, visit www.ioma.com or for copyright permissions please call 212-576-8747 or email content@ioma.com