PROGRAM OPERATIONS MANUAL SYSTEMPart RM – Records MaintenanceChapter 011 – Tax Procedures and Employer ReportsSubchapter 01 – Wage Reporting - GeneralTransmittal No. 6, 09/15/2025
Audience
Originating Component
OISP
Effective Date
Upon Receipt
Background
We are updating RM 01101.003 based on a legislative change from the Taxpayer First Act of 2019, enacted July 1, 2019, authorized the Department of Treasury and IRS to issue regulations that reduce the threshold for mandatory electronic filing. Treasury Decision 9972, published February 23, 2023, amended Regulations section 301.6011-2 to change the electronic filing rules for certain information returns, including Forms W-2 and W-3. The regulations lowered to 10 (from 250) the threshold at which employers must file certain information return electronically, including Forms W-2, W-2AS, W-2GU, and W-2VI (collectively Forms W-2), but not Form W-2CM. We removed references to magnetic media and replaced them with electronic reporting. We also removed other outdated references and updated language along with making some stylistic and grammatical changes that do not affect policy. We updated Safeguard language per OPD. We also updated and moved outdated language from RM 01105.003 and incorporated it into RM 01101.003.
Summary of Changes
RM 01101.003 The Internal Revenue Service and the Social Security Administration’s Combined Annual Wage Reporting (CAWR) Program
Revised the title to include “Memorandum of Understandings (MOU) ” for clarity and “& for Self-Employment” since the CAWR MOU is no longer one agreement.
Citations: Added statutory authority and link for Taxpayer First Act. Added Internal Revenue Code and link for, “Required use of electronic form.”
Subsection A. Clarified language in this paragraph and that the CAWR does not authorize SSA and IRS to enter into agreements. The authorization comes from Section 232 of the Act.
Added “with SSA and shared with IRS” for clarity. Moved “The IRS records earnings data to collect taxes from employees, self-employed individuals, and employers.” to the bottom of this subsection.
Removed sentence, "SSA records earnings data to determine eligibility for, and to calculate and pay Retirement, Survivors, and Disability Insurance (RSDI) benefits" since this data is used for other government programs and purposes.
Added a sentence about the Self-Employment MOU for context.
Subchapter A.1. Changed “system authorizes” with “explains how” based on explanation above regarding CAWR authorization. Changed “to” to “will.” First bullet: Deleted “enter into an agreement for jointly” and replaced with, “establish automated data exchanges to improve the wage reporting and reconciliation process” for clarity and based on explanation above regarding CAWR authorization.
Subchapter A.2.Revised and removed language by making stylistic and grammatical language changes for clarity.
Subchapter A.3., Removed and revised language by making stylistic changes to improve clarity. Added and revised the NOTE per OPD since it is standard language for federal policy on breach reporting. Capitalized the word, "management" in "Federal Information Security Management Act of 2002 (FISMA)."
Subsection B., Revised first sentence of the paragraph to reflect the change from one MOU to two separate ones. Removed “and IRS’ tax records” and added the sentence, “IRS is responsible for the assessment and collection of taxes” for clarification. Made grammatical and stylistic changes.
Subchapter B.1. Added “a.” to the subchapter heading.
Added “wage reporting” for clarification of annual wage reporting forms filed with SSA.
Added “b.” “Non-domestic employers file the following adaptations of Forms W-2 (except Puerto Rico).”
Added four additional bullets to clarify wage reporting forms used to report wages in U.S. territories incorporating some of the information from RM 01105.003, Subchapter C.2, from the NOTE into this subchapter while also revising and expanding the information for clarity.
Added a NOTE to clarify guidance for employers who file a different form in Puerto Rico. We also linked the General Instructions for Forms W-3 (PR) and W-3 C (PR) (which include instructions for non-domestic employers).
Subchapter B.2.
Added “tax” to clarify which types of forms are filed with IRS.
Added Schedule SE (Self-Employment Tax, Form 1040) since we incorporated language to cover self-employment from the SE MOU.
Added clarifying language to the NOTE for non-domestic employers filing Forms 941/941-SS with IRS. Provided a link to Publication 15 (Circular E).
NOTE:
Added information regarding IRS Form 941-SS stating that the form is no longer available.
Added information and link to Publication 15, Circular E.
Subchapter B.3.
Added “a. When to file.” Moved “Forms W-2 and W-3 into first sentence under “When to file.” Restructured first paragraph into two bullets clarifying when to file wage reports.
Added clarifying language to filing deadline. Also made stylistic changes. Separated the NOTE and moved it down one space. In the NOTE, added link to Form 8809 and corrected the title by changing upper case “To” to lower case “to” and added clarifying information about sending the form to IRS.
Added “b. How to file.” Adjusted spacing. Incorporated and revised for stylistic purposes, “Employers file their wage reports:” from Section RM 01105.003A. Labeled the word, “Electronically” (from the second bullet) as the first bullet to describe the first method to submit a wage report.
Added "Under IRS Rules" for clarification and revised the language to reflect the language change for lowering the electronic threshold for employers filing tax returns, including W-2s (250 to 10).
Added "(Copy A); two-to-a page" for clarification after "On prescribed paper forms"
Added, “W-3” for clarity. Provided a link to the General Instructions for Forms W-2 and W-3 that include the list of IRS returns that include determining if employers meet the 10 threshold. Incorporated language from RM 01105.003C.1 on electronic reporting and revised language in accordance with Filing Instructions for filing Form 8508. Revised outdated name of IRS Form 8508 and provided a link. Made grammatical and stylistic changes.
Added second bullet, incorporating language from RM 01105.003A. for describing a second method to submit a wage report (paper). Incorporated language from RM 01105.003C.1 (2nd paragraph) describing number of paper forms that can be filed in a tax year to comply with the Taxpayer First Act for lowering the electronic threshold. This language was changed from “fewer than 250 wage reports” to “fewer than 10 tax returns.”
Added 3rd bullet incorporating language from RM 01105.003A. describing a third method to submit wage reports (substitute paper forms). Added two sub-bullets, incorporating language from RM 01105.003C.3; updating language to reflect current language changes. Under first sub-bullet, replaced, "microfilming machines with "imaging."
Added paragraph under 2nd sub-bullet incorporating language from RM 01105.003 C.3. describing requirements for submitting substitute paper forms linking to requirements in IRS Publication 1141 and 1223 and adding URLs. Updated threshold information and language in the NOTE to reflect the new law.
Subsection C.
Made stylistic changes for flow.
Removed the word, "correctly," in the second paragraph since it is not needed.
Added "on paper" after "W-3c", to read, "...must file any Forms W-2c and W-3c on paper to correct them."
Within the NOTE, last sentence, added "to correct them" at the end of the sentence to read, "their forms W-2c and W-3c electronically to correct them."
Added additional W-2c information for domestic/non-domestic employers along with information to comply with the Taxpayer First Act.
Added IRS contact information.
Subsection D.
Made stylistic and grammatical language changes for clarity.
Subsection E.
Added the word, "employer" to "SSA's website." Revised "web site" to "website."
Added the following references and links for General Instructions for Forms W-2 and W-3, IRS Publication 1141, General Rules and Specifications for Substitute Forms W-2 and W-3, Publication 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c, Publication 15 (Circular E), Employer's Tax Guide, and Self-Employment POMS reference.
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
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.
The CAWR agreement explains how the SSA and the IRS will:
establish automated data exchanges to improve the wage reporting and reconciliation process; and
share documents that are agreed upon as being necessary for purposes of implementing the annual wage reporting process.
Significant ways IRS and SSA work to improve wage reporting:
periodically review the method and effectiveness of the data exchange process;
participate in employer workshops and payroll conferences; and
conduct a review process of all IRS forms and publications.
SSA works with the IRS to:
improve wage reporting;
facilitate data reconciliation; and
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.
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.
a. Employers and submitters file the following wage reporting forms with SSA:
Forms W-2 (Wage and Tax Statement),
Forms W-2c (Corrected Wage and Tax Statement),
Forms W-3 (Transmittal of Wage and Tax Statement),
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):
Form W-2AS is used to report American Samoa wages paid by American Samoa employers.
Form W-2CM is used to report the Commonwealth of the Northern Mariana Islands (CNMI) wages paid by CNMI employers.
Form W-2GU is used to report Guam wages paid by Guam employers.
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).
Employers and submitters file the following tax forms with IRS:
Forms 941 (Employer's Quarterly Federal Tax Return),
Forms 943 (Employer's Annual Federal Tax Return for Agricultural),
Forms 944 (Employer's Annual Federal Tax Return),
Schedule H (Household Employment Taxes, Forms 1040),
Schedule SE (Self-Employment Tax, Forms 1040).
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).
IRS requires employers and submitters to file Forms W-2 and W-3:
Annually, with the SSA; and
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.
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
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
On approved substitute paper forms (Employers may use an acceptable substitute form instead of an official IRS Form):
The format requirements for paper forms are rigid to ensure efficient and accurate processing by SSA's optical scanning, imaging, and data entry systems.
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.
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.
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.
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.