Companies that have employees must comply with a number of state and federal statutes regarding wages and payroll taxes, employee treatment and safety. Within a month following the end of the calendar year, companies must send W-2 forms to employees. They must also send W-2 forms to the Internal Revenue Service. When companies formally file W-2s with the IRS, they must include Form W-3, Transmittal of Wage and Tax Statements, as a summary control sheet.
Companies with seasonal, part-time and full-time employees use W-3 forms to compile and summarize W-2 form information after the end of the tax year. W-3 forms list the total number of employees for the year who received W-2s and the total amount of wages paid to these employees. The IRS double-checks the sum of a company’s W-2s against the summary information provided in Form W-3, so a company must verify it is using the W-3 for the correct tax year.
Any company that is required to file one or more Form W-2s must also complete and file Form W-3. Therefore, any company that has W-2 employees who make more than $600 per year must file a W-3. However, if your company uses a personnel employment organization, or PEO, or an outsourced payroll service, the PEO or payroll service will provide both the W-2 and W-3 forms.
The establishment number on Form W-3 is to identify separate business establishments for a company for tracking purposes. A company may specify different establishment numbers based on different employee identification numbers, or EINs, if the company has legally separate subsidiaries or divisions and file separate W-3s for each division. Alternatively, a company may elect to compile all the company’s divisions’ reporting on one W-3 and use the same establishment number for each, or leave the space blank.
A company may also opt to specify an establishment number based on company location. A company with a number of office or retail locations may choose to do this for better internal tracking purposes. The company would provide a different establishment number for each location and file W-3s including the summary information only for W-2 employees who work at that location. Small companies that have only one location and no divisions can disregard the establishment number.