Why do companies wait so long before giving out W-2s?

January 30, 2007 1:53 PM

Why do companies wait so long before giving out W-2s?

I just received my yearly notice (by email) that my W-2 is going to be mailed to me tomorrow, and it reminded me of a curious phenomenon: In every job I've ever had, no matter how well-run or tech-savvy, I seem to get my W-2s on or after the "last possible day" legally required.

Most other payroll-related technology has improved in the last 10 years. Especially in the internet age with direct-deposit and ADP-online-style accounting, shouldn't I just be able to log in my account and print this on or around January 1st? (the amounts listed on the W-2 are exactly the same as the YTDs on my final paycheck of the year)

Is generating a W-2 a lot harder than it looks?

It starts to make my mind drift to conspiracy theories, like:
Do companies "hold" our federal withholding amounts in interest-bearing accounts and therefore lose money the earlier they release the W-2s?

Or the Occam's Razor: are corporate accountants simply just as lazy as the rest of us when it comes to all things tax-return-related?

posted by stuckie to work & money (11 answers total)

I'd like to know the answer to this too...or maybe these lazy companies are in league with the feds to delay the doling out of returns to those lucky enough not to have to pay. Mine arrived on the 27th.
posted by Asherah at 2:07 PM on January 30, 2007

No, companies are required to remit to the government, very soon after you are paid, any amounts they withheld from your check for taxes and so forth. The government caught onto the "we'll just delay our remittances by a little bit and pocket the interest" idea in corporate scamming a LONG time ago, and being late on those remittances is harshly penalized.

Mostly it's just because the people who do the W-2s also happen to be very busy with other corporate accounting at this time of year. Some companies put them out quickly.
posted by jellicle at 2:10 PM on January 30, 2007

I don't even know what a W-2 is, but I know being the company accountant can be a very busy job. If you had a hundred other things to do and you didn't have to do this particular task until one, two, or three months later, you can be sure you'd find something more urgent to do in the mean-time.

Or hell, maybe they just procrastinate as badly as me and don't do anything until the last possible minute :)
posted by jon4009 at 2:16 PM on January 30, 2007

Even in a computer heavy, ADP environment, there are still a lot of steps to go through before the W-2's are done. I did payroll for 350 employees in three states, so it was a bit complictated. Before we even ran the last payroll of the year, ADP would send out a preliminary W-2 register to be reviewed. Then a second preliminary register would be sent after the last payroll was processed.

If there was an error on a paycheck in the last week of the year, a special payroll has to be processed to move earnings into the prior year. And after every change another preliminary register has to be run. All these reports were printed or put on disc and then overnighted, but it still took time to review them and send back the final authorization to print the W-2's.

And depending on how much your company pays for processing payroll, there may be some poor shmoes in accounting who have to stuff and seal envelopes.

I just started working at a smaller company that was struggling to get W-2's out this year. They also had multiple states and had changed payroll processors halfway through the year. We had to handtype a few that had errors, and that takes forever when you are used to computers and can't use white-out.
posted by saffry at 2:19 PM on January 30, 2007

I'd be curious to hear from someone in HR or a corporate accountant (or someone from a payroll company like ADP).

I kind of understand a general kind of delay due to being too busy to prepare & mail hard-copies at the first of the year (though the calendar year isn't exactly when most corportate EOY documents are filed), but isn't most of this stuff outsourced these days anyway?

And with a system like ADP, where I have online access to PDFs of my paychecks and totals near-instantaneously, it seems like all that would have to be done is to "format" the page differently, and Bingo! It's a W-2!

If there is other behind the scenes number-crunching going into these documents, I'm not seeing it.
posted by stuckie at 2:22 PM on January 30, 2007

If you wait, you lower the chance of having to send out revised W2s.

(Vanguard gives this same reason for why they send their 1099's out in late January.)
posted by smackfu at 2:31 PM on January 30, 2007

What saffry and smackfu said. Years ago I used to work in a group that handled W-2s for our small office plus 1099-Rs for the pensioners from a labor union. We waited until the last day because of possible voided payments that would have had to be reflected in the W-2 or 1099-R. Occasionally a pensioner died in the prior year and we didn't hear about it until sometime well into January. The forms might be printed sometime in mid-month, but we would hold them in case we had to pull one out and re-do it.

And as saffry indicated, our own office staff might have payroll adjustments December, and then there were those hand-typed forms we had to send out later on in February or March.

granted, this was in the 1980s and early 90s -- I know the technology aspects are much different now, even if the human aspect might not have changed as much...
posted by Robert Angelo at 3:34 PM on January 30, 2007

To add to what Saffry said:

On top of the processing and auditing being outsourced, the processing company then commonly oursources the printing as well. The biggest printer in the world, RR Donnelley & Sons, handles somthing like a quarter of the US's W2 forms. When your company screws up it's final payroll and doesn't figure it out until Jan 15th, and then it finally gets corrected and the data squirted to RRD on January 29th, at which point the laser printers and pressure sealers were already set to run 24/7 to get payroll out on time... and the hairy old guy in Chicago looks at his print queue, shrugs, and cranks the "speed" dial into the red so that you can get your payroll mailed to you something akin to on time.
posted by SpecialK at 4:08 PM on January 30, 2007

I did payroll with Intuit Payroll Services last year. They mailed the w2s to me and they arrived last week. I mailed them to the people who needed them immediately, but that still meant there was no way they were arriving to my people before the 20th. I did have one person who apparently moved without a forwarding address, so it came back and by the time I got a correct address, it went out yesterday. Not my fault the employee didn't get it till the end of the month.

As long as it gets out before the deadline it's no problem, so don't worry about it.
posted by ilsa at 4:13 PM on January 30, 2007

When your company screws up its final payroll and doesn't figure it out until Jan 15th

And this is really, really common. I calculated a lot of group term life Table I imputed income for our clients in the first couple of weeks of this month.
posted by MarkAnd at 7:41 AM on January 31, 2007

Working for ADP, the most common reason is adjustments. There is a special team that spends the better part of several weeks between mid December and late January doing manuals, third party sick pays, etc.

Sometimes if there are payment issues or if an account is no longer active, the w2s can be held for payment. YMMV.
posted by dr_dank at 9:15 AM on January 31, 2007