When a company switches payroll companies during the year, which payroll company is responsible for submitting W-2 information for the tax year to the IRS?

by Michelle
(Philadelphia, PA)

A non-profit business received notice from IRS that tax filing does not agree with W-2 amounts submitted. Research determined that Payroll Company A, which provided services from Jan-Sept, sent in W-2 amounts. Current Payroll Company B, who provided services for remainder of the year submitted W2 information for the entire year.


Both payroll companies agree that there was an erroneous W-2 filed, but Company A will not make the adjustment/amendment unless they are paid $500 for their services. Company B will not make the correction because they feel that the error was on the part of the previous company and will not correct mistakes of another payroll company, especially when it is one of their primary competitors in this area.

Who is responsible? Is it legal for Company A to charge to correct an error that they caused, especially if they were not supposed to submit any further information on the business' behalf after services were terminated in Sept?

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Payroll Company Responsibility
by: Best Business Payroll

What Company A did in asking for $500 to rectify a mistake on their part was, unfortunately, perfectly legal. It was not, however, good business practice since it understandably left a bad feeling about Company A with you.

Company B is completely responsible for submitting accurate W-2's which they did. They are also correct in placing the responsibility on Company A for fixing the problem Company A caused.

You will apparently need to pay Company A the $500 they asked for to solve the problem. But then you are also free to inform Company A that you will never use their services again and will let your business associates in other companies know your opinion of how Company A conducts business. Our sympathies for your predicament.

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