The Internal Revenue Service is expanding its testing of individual taxpayer verification codes in an effort to reduce incidents of refund fraud.
The program began last year with testing of the code on two million W-2 forms. The program expands for 2017 to 50 million W-2s.
In partnership with certain payroll service providers, a sixteen-digit code is assigned to each employee and printed on the employee’s W-2. The employee uses the code when filing their return electronically.
The IRS then verifies a match between the data they received from the payroll service provider for that employee and what the employee submitted with their return.
For purposes of this test, missing or inaccurate codes will not affect tax return processing. Employees with blank verification code fields do not need to enter a code. Additionally, some employees with a code may find their tax return software does not request the code.
The test does not include paper-filed returns.