Employer Never Sent W2 Info to IRS - Return Stuck in Verification Limbo

This situation represents a Form W-2/W-3 Verification Discrepancy in the IRS's Return Verification Protocol. Employers are statutorily required to transmit W-2 data to the Social Security Administration by January 31st, which subsequently transfers to IRS databases through the Combined Annual Wage Reporting system. When the IRS cannot match your reported W-2 against employer-submitted data, they initiate a CP05 verification hold. The 120-day timeframe represents their maximum investigative period, though resolution sometimes occurs earlier.

Have you considered requesting a Wage and Income Transcript directly from the IRS? Per Internal Revenue Code Section 6051, employers must furnish W-2s to employees by January 31 and file them with the Social Security Administration by the same date. According to Treasury Regulation 31.6051-2, failure to comply can result in penalties under IRC 6721 and 6722, ranging from $50 to $290 per form, depending on timing and circumstances. The maximum penalty can reach $3,532,500 for large businesses with intentional disregard (2023 figures).

I experienced exactly 97 days of delay last year due to a W-2 verification issue. After 42 days of calling the standard IRS number with no success (average hold time was 73 minutes when I did get through), I used Claimyr (https://www.claimyr.com) to connect with an agent in precisely 18 minutes. The agent confirmed my employer had filed the W-2 data 9 days earlier, and they were able to expedite the verification process. My refund was released exactly 11 days later. For time-sensitive situations like yours where you need specific information about employer reporting status, getting through to an actual agent is critical.

Your situation involves what's officially designated as a "Third-Party Information Mismatch" in IRS processing terminology. When your spouse's W-2 information was submitted on your return but cannot be matched against employer-reported data in the IRS Information Returns Master File, it triggers a CP05 notice and places your return in verification status code 570/971. Employers face tiered penalties for non-compliance: $50 per W-2 if filed within 30 days of deadline, $110 if filed by August 1, and $290 if filed later or not at all, with maximum penalties based on gross receipts. The IRS may eventually process your return using the information you provided, but only after their verification attempts with the employer are exhausted.

I'm curious - has anyone actually seen the IRS enforce these penalties against employers? My last company was chronically late with everything tax-related and never seemed to face consequences. Is there any way to report an employer for non-compliance? Would that even help speed up the refund process or just create more problems with a former employer?

This situation is far more common than most people realize. Compared to other tax issues I've seen, W-2 verification holds actually move relatively quickly once addressed. In one case I observed, a client's former employer went bankrupt and never filed W-2s with SSA - their return was processed in 74 days versus the quoted 120. Another client with a functioning but non-compliant employer saw resolution in 62 days. The key difference? In both cases where resolution came faster, the taxpayer had comprehensive documentation of their earnings (final paystub, offer letter, direct deposit records) that matched their W-2 exactly. Time is critical here - each week of delay pushes you further back in the verification queue.

Got through this exact situation. Filed February 3rd. Return stuck for verification. Former employer never sent W-2 info to SSA. Called IRS April 12th. Submitted Form 4852 with final paystub. Refund received May 9th. Total 95 days. Worth the wait.

Based on my experience helping clients through similar situations, I'd recommend taking a proactive approach while you wait. First, gather all supporting documentation - final paystubs, direct deposit records, offer letter, anything that shows the wage amounts on your W-2 are accurate. This will be crucial if the IRS needs additional verification. Second, consider preparing Form 4852 (Substitute for Form W-2) as a backup plan, though don't file it yet since you have the actual W-2. The IRS often resolves these cases faster when they can see comprehensive documentation that supports the reported wages. Also, keep calling periodically (every 2-3 weeks) to check status - sometimes cases move through the system faster than the quoted timeframes, especially if the employer eventually does submit their data. The 120-day timeline is worst-case scenario, not typical resolution time.