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Currently, as far as I know, although there is a stated penality for late filing of W2s I haven't ever seen one assessed.

The first filing season I worked for IRS Taxpayer Service was still a function of the Collection Division, and we trainees all worked TPS. I happened to be manning the counter the day in February the division chief popped in for a visit. He asked if we had any problems with forms, and I told him we'd run out of W-2's for the prior year and couldn't get any more. He said, "We're getting the information on these people so we can assess the penalty, right?" I probably blushed, looked at my feet, hemmed and hawed, etc. until he took pity on me and said, "Just joking."

You seem to have more experience with delinquent W-2's than I, since I was never involved in the processing of them. I suspect the penalty is not routinely imposed but appears now and again as a "pile-on" item, sort of like sass a cop and you'll discover obscure ordinances you never dreamed of.

As for the Obama proposal, I haven't looked at the website for details, primarily because you never find details of grand proposals on any campaign website. The basic concept has been around for years, though, and is one of the prime goals of IRS systems modernization, which has also been around for years (more than 20). As Peter noted, it could be great for many people.

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