Effective Dates: 09/15/2025 - Present Previous | Next

TN 6 (09-25)

RM 01101.003 The Internal Revenue Service and the Social Security Administration’s Memorandum of Understanding (MOU) for the Combined Annual Wage Reporting (CAWR) Program & for Self-Employment

CITATIONS:

The Taxpayer First Act (Pub. L. 116–25 (PDF), 133 Stat. 981, pages 32-34

26 CFR 301.6011-2 -- Required use of electronic form.

Act as amended, Sec. 232 and Sec. 205(c)(2)(A); Pub.L. 94-202;

20 CFR §422.114 Annual Wage Reporting Process,

69 FR 33690 Filed 6-16-04 Notice of Changes in Magnetic Media Filing Requirements for Form W-2 Wage Reports

A. Introduction to Combined Annual Wage Reporting (CAWR)

The Internal Revenue Service (IRS) and the Social Security Administration (SSA) signed an inter-agency agreement, a Memorandum of Understanding (MOU), that details the responsibilities of both agencies in the CAWR process. The CAWR indicates how the two agencies share wage data. The CAWR process helps ensure that employers correctly report tax information to IRS and that all Forms W-2 (Wage and Tax Statement), and W-3 (Transmittal of Wage and Tax Statement), or equivalent electronic reports are filed with SSA and shared with IRS.

In a separate MOU, SSA and IRS set terms and conditions under which IRS provides SSA self-employment information from tax returns and SSA provides IRS self-employment and wage determination postings.

The IRS records earnings data to collect taxes from employees, self-employed individuals, and employers.

1. CAWR authorizations

The CAWR agreement explains how the SSA and the IRS will:

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    establish automated data exchanges to improve the wage reporting and reconciliation process; and

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    share documents that are agreed upon as being necessary for purposes of implementing the annual wage reporting process.

2. Improving wage reporting

Significant ways IRS and SSA work to improve wage reporting:

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    periodically review the method and effectiveness of the data exchange process;

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    participate in employer workshops and payroll conferences; and

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    conduct a review process of all IRS forms and publications.

3. Data exchanges

SSA works with the IRS to:

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    improve wage reporting;

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    facilitate data reconciliation; and

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    identify name and Social Security number (SSN) discrepancies (when name and SSNs do not match our records).

NOTE: SSA will maintain and safeguard all federal tax returns and return information (FTI) received from the IRS in accordance with the Internal Revenue Code (IRC) section 6103(p)(4) and comply with all additional guidelines required by IRS Publication 1075 (Tax Information Security Guidelines for Federal, State, and Local Agencies). SSA will also comply with OMB reporting guidelines for loss of personally identifiable information (PII) per OMB M-17-12 (January 3, 2017) and will comply with the Federal Information Security Management Act of 2002 (FISMA). The Office of Privacy and Disclosure (OPD) is responsible for notification to IRS, with input from the component experiencing the breach and other stakeholders, as needed.

If suspected or confirmed unauthorized access or improper disclosure of FTI occurs, follow the agency's loss reporting procedures outlined in the SSA Breach Response Plan and immediately report it to a manager. The manager will report the FTI loss to the Loss Reporting Tool (LRT). When a manager is not available, the unauthorized disclosure must be reported directly to the LRT. OPD is responsible for monitoring the LRT.

B. IRS and SSA responsibilities for processing wage and tax reports

The MOUs outline each agency’s responsibilities to ensure that employers, submitters, and self-employed individuals pay and report the correct amount of income tax to the IRS and file all necessary wage and tax information with SSA and IRS to record to our earnings records. IRS is responsible for the assessment and collection of taxes.

1. Filing forms with SSA

a. Employers and submitters file the following wage reporting forms with SSA:

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    Forms W-2 (Wage and Tax Statement),

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    Forms W-2c (Corrected Wage and Tax Statement),

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    Forms W-3 (Transmittal of Wage and Tax Statement),

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    Forms W-3c (Transmittal of Corrected Wage and Tax Statement).

b. Non-domestic employers file the following adaptations of Forms W-2 (except Puerto Rico):

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    Form W-2AS is used to report American Samoa wages paid by American Samoa employers.

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    Form W-2CM is used to report the Commonwealth of the Northern Mariana Islands (CNMI) wages paid by CNMI employers.

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    Form W-2GU is used to report Guam wages paid by Guam employers.

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    Form W-2VI is used to report U.S. Virgin Islands (USVI) wages paid by USVI employers.

NOTE:  Employers in Puerto Rico file Form 499R-2/W-2PR (PR Withholding Statement).  See  General Instructions for Form W-3 (PR) and W-3C (PR). (English instructions included).   

2. Filing forms with IRS

Employers and submitters file the following tax forms with IRS:

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    Forms 941 (Employer's Quarterly Federal Tax Return),

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    Forms 943 (Employer's Annual Federal Tax Return for Agricultural),

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    Forms 944 (Employer's Annual Federal Tax Return),

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    Schedule H (Household Employment Taxes, Forms 1040),

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    Schedule SE (Self-Employment Tax, Forms 1040).

NOTE:

Employers and submitters reporting for employees in Guam, American Samoa, the U.S. Virgin Islands, Puerto Rico, and the Commonwealth of the Northern Mariana Islands file adaptations of these forms. IRS Forms 941-SS are no longer available beginning the first quarter of 2024. Employers in U.S. territories who had filed Form 941-SS must now file Form 941 in English or Form 941 (sp) in Spanish, whether they are located in the U.S. or in any of the U.S. territories. For more information on employers with territory employees, see IRS Publication 15 (Circular E).

3. Wage reporting filing requirements

a. When to file

IRS requires employers and submitters to file Forms W-2 and W-3:

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    Annually, with the SSA; and

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    On or before January 31st (if this date falls on a Saturday, Sunday, or legal holiday, the deadline will be the next business day) whether filing electronically or on paper in the year following the wage reporting year.

    NOTE: Employers may request a single non-automatic extension of time to file Forms W-2 with the SSA by sending IRS Form 8809, Application for Extension of Time to File Information Returns, to IRS at the address shown on Form 8809. IRS indicates extensions will generally only be granted for extraordinary circumstances or catastrophe. See IRS Form 8809, No. 7 for more information about reasons for extensions.

b. How to file

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    Electronically:

    Under IRS rules, employers filing 10 or more information returns total (all returns combined) with IRS and SSA, including Forms W-2 in a tax year must file wage reports electronically unless the IRS grants a waiver. See General Instructions for Forms W-2 and W-3 for lists of information returns that are included in determining if you meet the 10 information return threshold. Employers can request a waiver from this requirement by filing Form 8508, Application for a Waiver From Electronic Filing of Information Returns, with IRS at least 45 days before the due date of Form W-2, or 45 days before filing the first Form W-2c for the return(s); or

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    On prescribed paper forms (Copy A; two-to-a page):

    Employers who prepare fewer than 10 information returns in a tax year may file reports on prescribed paper forms; or

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    On approved substitute paper forms (Employers may use an acceptable substitute form instead of an official IRS Form):

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      The format requirements for paper forms are rigid to ensure efficient and accurate processing by SSA's optical scanning, imaging, and data entry systems.

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      Employers may use privately printed paper substitute forms W-2 and W-3 that are exact replicas of IRS approved forms. Employers with mechanical equipment who require the use of continuous forms will need to obtain substitute forms from private sources.

Substitute forms must comply with the requirements in IRS Publication 1141, General Rules and Specifications for Substitute Forms W-2 and W-3 and in Publication 1223, Substitute Forms W-2c and W-3c.

NOTE: We encourage employers to file electronically even if they are filing fewer than 10 information returns. SSA no longer accepts filing of non-paper physical (magnetic) media such as tapes, cartridges, and diskettes. Additionally, if the original Forms W-2 and W-3 was filed on paper, then the employer must file any Forms W-2c and W-3c to correct that form on paper. If the original Forms W-2 and W-3 were filed electronically, the employer must also file their Forms W-2c and W-3c electronically.

C. Correcting previously processed wage reports

The W-2c corrections process is the primary method for correcting errors on wage reports previously submitted and processed. Employers and submitters should file a Form W-2c with a Form W-3c, as soon as they discover an error on their wage report. Also, employers and submitters should provide a copy of the Form W-2c to the employee as soon as possible.

Employers must file Forms W-2c electronically to correct originally filed Forms W-2, W-2AS, W-2GU, and W-2VI (collectively, Forms W-2), but not Form W-2CM, depending on how the original Forms W-2 were filed. Employers in Puerto Rico file Form 499R-2c/W-2cPR (Corrected Withholding Statement) to correct Forms 499R-2/W-2PR.

NOTE: If the original Forms W-2 and W-3 were permitted to be filed on paper, then the employer must file any Forms W-2c and W-3c on paper to correct them. If the original forms W-2 and W-3 were filed electronically, the employer must also file their Forms W-2c and W-3c electronically to correct them.

D. Reconciling SSA and IRS wage and tax information (records)

The IRS and SSA Reconciliation Process electronically compares the employer's earnings report data processed by SSA with the employer's tax report data processed by IRS, matching the reports by the Employer Identification Number (EIN) and Tax Year (TY), to determine if the income reported to both agencies are the same. If wage data processed by SSA is less than the amount reported to IRS (by more than the amount of one quarter of coverage for the tax year), we assume that the processed earnings are incorrect, and ask the employer to explain and resolve the differences. For more information on Reconciliation, see RM 02061.000.

E. References

For a complete listing of current wage and tax reporting forms, please visit IRS Forms and Publications.

For more information on Employer Wage Reporting, please visit SSA’s employer website, Employer W-2 Filing Instructions & Information.

For more information on general employer reporting, see General Instructions for Forms W-2 and W-3 (Including Forms W-2AS, W-2CM, W-2GU, W-2VI, W-3SS, W-2c, and W-3c).

For more information on substitute paper forms, please see IRS Publication 1141, General Rules and Specifications for Substitute Forms W-2 and W-3 and Publication 1223, Substitute Forms W-2c and W-3c.

For more information on the CAWR process, see RM 01101.001B.2.

For more information on Reconciliation, see RM 02061.000.

For more information on all employers, including agricultural employers and employers in U.S. territories, see Publication 15 (Circular E), Employer's Tax Guide.

For more information on Self-Employment, see RS 01801.020, Responsibilities of IRS and SSA.

To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0101101003
RM 01101.003 - The Internal Revenue Service and the Social Security Administration’s Memorandum of Understanding (MOU) for the Combined Annual Wage Reporting (CAWR) Program & for Self-Employment - 09/15/2025
Batch run: 09/15/2025
Rev:09/15/2025