From the Hotline: Earned Income Credit Notice

Question: Is an employer required to distribute the earned income credit (EIC) notice, or is distribution of W-2 Copy B EIC notice sufficient, even though the wording varies from the support collection unit (SCU) EIC notice?

Answer: The earned income credit (EIC) notice is a federal notice issued by the IRS and is found on the back of Copy B of the employee’s W-2. Regardless of which state(s) employees work in, the notice should go out to all employees who receive a Form W-2 from their employer and must be provided to all employees no later than February 9, 2015.

An employer who provides a Form W-2 to the employees including the EIC language on the back of Copy B of the Form W-2 has met the EIC notice requirements. However, an employer may choose to provide any of the following documents in order to meet the notice requirements:

  • IRS Form W-2, which has the required EIC information on the back of Copy B.
  • A substitute Form W-2 with the same EIC information on the back of the employee’s copy that is on Copy B of the IRS Form W-2.
  • Notice 797, Possible Federal Tax Refund Due to the EIC.
  • A company’s written statement with the same wording as Notice 797.

The statement that the state SCU provides should be compared to Notice 797 to ensure the required language is included. According to the IRS, an employer who provides a Form W-2 to each employee on time is not required to take further action as long as the back of Copy B contains the EIC language. However, if the employer issues a substitute Form W-2 to any employee and that substitute Form W-2 does not have the required EIC notice on the back of the employee’s copy, the employer will be required to provide EIC notice to the employee within one week of the date that the substitute Form W-2 is provided. This is done through Notice 797, or a company issued notice containing the same language as Notice 797. The company has the option of providing the required notice by using any of the methods listed above.

Check with the state noncustodial support unit for further reporting requirements at the state level.

Resource: www.irs.gov/pub/irs-pdf/n1015.pdf