W-2 & 1099 Electronic consent best practices
Implement best practices for collecting electronic W-2/1099 consent from employees and workers.
Context
Employers are required to furnish all employees and workers with W-2/1099 documents at year-end. W-2/1099’s can either be provided to employees or workers electronically or physically either in person or through the mail as a paper copy. Employees or workers must opt-in to having their W-2/1099 delivered electronically otherwise, by default, they must receive their W-2/1099 in physical form. Please note: Employers cannot require their employees and workers to opt-in to receiving their W-2/1099 electronically.
Most payroll providers, including Check, fulfill this requirement on behalf of their employers. However, Check must work with its partners to collect electronic consent from the employees and workers on their payroll product.
Best practices
Due to the fact that each partner has built a different product on top of Check’s platform and each partner interacts with the employees and workers using it in different ways, there isn’t a one-size-fits-all approach to collecting consent from employees or workers. As a result, Check has put together some best practices for its partners:
Consent generally has three parts.
- Benefits of receiving an electronic W-2 or 1099. Electronic delivery of W-2/1099 documents provides many benefits including:
- Earlier access to W-2/1099
- Reduced chance of lost, delayed, or stolen W-2/1099s
- Remote accessibility if employee/worker is away from their usual home or work location
- Easy download to many tax preparation software programs
- Environmentally friendly - print only if one needs to
- Disclosure notice. The disclosure notice must include similar copy, displayed in a way that is clear and conspicuous to the employee:
- Please read this entire notice and, if you wish to receive all future W-2/1099 statements from this company electronically, provide your consent by [instructions].
- If you do not consent to receive an electronic W-2/1099, you will be given a paper W-2/1099.
- This consent will be in effect for [duration] and covers [scope].
- The process for withdrawing consent for electronic receipt is [fill in]. We will confirm the withdrawn consent by [manner] no later than [number of days after request].
- The process for requesting a paper W-2/1099 at a later time is [fill in]. Such a request [will/will not] be considered a withdrawal of your consent to electronic receipt.
- Even if you consent to electronic receipt, your W-2/1099 will not be provided electronically if [fill in - for example, if the employee is terminated].
- You may update your contact information for receipt of your electronic W-2/1099 by [describe process].
- The employee must also be notified that the withdrawn consent does not apply to the previously issued Forms W-2.
- The employee must be provided with a description of the hardware and software used to access the Form W-2 and the date when the Form W-2 will no longer be available on the website.
- The employee must be informed that they may be required to print the Form W-2 and attach it to a federal, state, or local income tax return.
- [Any changes to the employer’s contact information. Also best practice to provide a phone number or email address for questions].
- Access to W-2/1099 form. Information on how and when an employee or worker can access the W-2/1099 electronically must be provided if they consented to electronic delivery. An email or notification should be sent or displayed in a centralized location and must include the following statement in capital letters, “IMPORTANT TAX RETURN DOCUMENT AVAILABLE” once the W-2/1099 is available.
While including the benefits for electronic W-2/1099s and how to access the W-2/1099 is not mandatory to include as part of consent, it is required that employees and workers be alerted once the forms are available to view. Employees and workers can be alerted by mail, e-mail, in person, or as a posting on a centralized website available to employees.
Important: Consent must be collected directly from the employee or worker. It also must be collected through the channel by which you expect to deliver the W-2/1099 form, when available. Without direct consent, employers must provide a physical copy of the W-2/1099 form.
W-2/1099 electronic delivery benefits for partners
There are many benefits to delivering W-2 and 1099 documentation electronically to employees and workers, as highlighted above. There are also benefits to partners and employers as well. For instance:
- Cost savings on stationary, printing, distribution, and postage
- Less administrative burden to reissuing lost/delayed forms
- Piece of mind know that forms were delivered before required due dates
Confirming employee election
If you need to confirm how an employee is set up to receive their copy of the W-2, you can view this on the Employee Info tab in console.
Scroll down and there is a toggle that shows the employees current selection on whether or not the employee has opted into paperless delivery of W-2 statements.
Can we migrate W2/1099 electronic consent in embedded setup?
We don’t do this, and we legally can’t support it. The IRS states that if there are any changes in hardware or software after initial consent, a new consent is required to receive the statement electronically.
Helpful Links and Examples
Here are a few helpful links to official documentation and examples of collecting consent that the Check team thinks are best-in-class:
- Official IRS guidance can be found here, page 16.
Last updated on August 31, 2024