W2 Late Filing Penalty - Payroll Processor

My client relied on a payroll processor to file their W2s. The payroll processor (local company) e-filed the W2s on 02/01/2021 for tax year 2020. Not sure what was sent to my client, but the payroll processor submitted duplicate W2s in August. The Social Security Administration processed the duplicate submission and now the wages don't tie to the 941s reported to the IRS.

Payroll processor received all notices and ignored them (they have been fired) and now the IRS is sending my client a large penalty for late filing. The IRS notices only says that the W2s were late filed in August and has no mention of them being filed 1 day late in February.
I want to know the best way to respond. Lawyer will be involved to sue the payroll processor for not filing on time but the company probably doesn't have much in the way of funds.

I called the SSA 4 different times and got 4 separate answers all over the spectrum. I was thinking of sending a response to the IRS showing the original e-filing submission on 02/01/2021 and again in August and explaining that the client relied on a payroll processor to handle all filings. Has anyone else seen anything similar to this and abated the penalties? The penalty is over 75K.

Since 1/31/2021 was on a Sunday, the W-2s were actually due on 2/01/2021, so NOT late.
If you have something to prove they were efiled on 2/01/2021 I would definitely send that in response to the notice. Per the instructions for 2020 Forms W-2:

Due date for filing with SSA. The due date for filing 2020 Forms W-2, W-2AS, W-2CM, W-2GU, W-2VI, W-3, and W-3SS with the SSA is February 1, 2021, whether you file using paper forms or electronically.

Sometimes the SSA doesn't get them processed correctly, but when they are corrected via SSA, there is a code you can choose so that they don't show as late, but merely in response to a question from SSA. This happened to me several years ago, but my response to SSA chose the correct code, so never got a notice from the IRS trying to say I was late.

I wonder why they didn't go through when originally sent? Were you able to get a copy of notices sent by SSA why they were asking for them? I wonder if your client could get a copy of the notices from SSA of what they sent.

Also, are you saying that SSA has doubled all the amounts? Sounds like they had the originals from the 2/1/2021 submission, and the second submission needs to be explained away as duplicates.

Since 1/31/2021 was on a Sunday, the W-2s were actually due on 2/01/2021, so NOT late.
If you have something to prove they were efiled on 2/01/2021 I would definitely send that in response to the notice. Per the instructions for 2020 Forms W-2:

Due date for filing with SSA. The due date for filing 2020 Forms W-2, W-2AS, W-2CM, W-2GU, W-2VI, W-3, and W-3SS with the SSA is February 1, 2021, whether you file using paper forms or electronically.

Sometimes the SSA doesn't get them processed correctly, but when they are corrected via SSA, there is a code you can choose so that they don't show as late, but merely in response to a question from SSA. This happened to me several years ago, but my response to SSA chose the correct code, so never got a notice from the IRS trying to say I was late.

I wonder why they didn't go through when originally sent? Were you able to get a copy of notices sent by SSA why they were asking for them? I wonder if your client could get a copy of the notices from SSA of what they sent.

Also, are you saying that SSA has doubled all the amounts? Sounds like they had the originals from the 2/1/2021 submission, and the second submission needs to be explained away as duplicates.

I spoke to the SSA and was told weekends don't matter and the due date is 01/31 no matter what. So still late filed.

I spoke to the SSA and was told weekends don't matter and the due date is 01/31 no matter what. So still late filed.

Not according to their website
https://www.ssa.gov/employer/filingDeadlines.htm

Deadline Dates to File W-2s

January 31st is the deadline to file W-2s using Business Services Online or to submit paper Form W-2. If this date falls on a Saturday, Sunday, or legal holiday, the deadline will be the next business day.
January 31st is the deadline to distribute Forms W-2 to employee(s).

I spoke to the SSA and was told weekends don't matter and the due date is 01/31 no matter what. So still late filed.

Not according to their website
https://www.ssa.gov/employer/filingDeadlines.htm

Deadline Dates to File W-2s

January 31st is the deadline to file W-2s using Business Services Online or to submit paper Form W-2. If this date falls on a Saturday, Sunday, or legal holiday, the deadline will be the next business day.
January 31st is the deadline to distribute Forms W-2 to employee(s).

Doesn't surprise me the agent is wrong. Yes, the IRS is giving a penalty not for the February filing but for August.
The wages have been doubled. I'm unable to get any notices from the payroll professor from the SSA or IRS. All we got is a potential penalty notice from the IRS.
I'll respond with the February 1st submission and hope the IRS abates the penalty altogether. Is there anything else I'm missing?

If the wages have been doubled, then something has to be done to correct that. Do you have POA for IRS? And you still can't get anything?

If the wages have been doubled, then something has to be done to correct that. Do you have POA for IRS? And you still can't get anything?

IRS won't tell me what the letters that were mailed actually say.
transcript doesn't provide anything since the penalties are only proposed.

SSA agent last time told me the wages would get fixed automatically. But same agent gave me incorrect information about the filing due date...

This strikes me as pretty straightforward. Get a POA and communicate to the IRS that there were two filings. The original, timely one, and a duplicate made in August. This assumes the original filing was correct.

The second should not be regarded as late, as it was not necessary.

Bill well for your time and have the client make a claim with the payroll processer for the cost. I am usually pretty generous when it comes to dealing with notices, but absolutely do not cut any slack when dealing with someone else's mess.

This strikes me as pretty straightforward. Get a POA and communicate to the IRS that there were two filings. The original, timely one, and a duplicate made in August. This assumes the original filing was correct.

You don't mention how many employees or total payroll numbers, but is the $75K a function of the 941s not matching the W2s? Are they looking for the taxes? The penalty for late filed W2 forms is $100 after 8-1, I think. Does your client have 750 employees?

The second should not be regarded as late, as it was not necessary. No taxes are due, as the original 941s and W2 filings should tie. Again, that assumes the payroll processer did not make any other errors and properly remitted the taxes.

Bill well for your time and have the client make a claim with the payroll processer for the cost. I am usually pretty generous when it comes to dealing with notices, but absolutely do not cut any slack when dealing with someone else's mess.