The IRS has partnered with some payroll service in on order to conduct the test. A verification code field will appear on a limited number of W-2s providing to up employees. The code appeared on 2 million W-2s in 2016 and will be on about 50 million for the next filing season.

The objective is to verify Form W-2 data submitted by taxpayers on e-filed individual tax returns. A 16-digit code and a new Verification Code field will appear on a limited number of Form W-2 copies  provided to employees by the participating payroll providers.

The code will be displayed in four groups of four alphanumeric characters, separated by hyphens this way: XXXX-XXXX-XXXX-XXXX. Its placement will vary on different W-2s. The Verification Code will appear on some versions of Form W-2 copies B and C, in a separate, labeled box.

The IRS is providing instructions which tell tax preparers and taxpayers to enter the code in the tax return software if the code field is populated. The software or preparer might not request not the codes and codes will not be used on paper returns

The Verification Code box will be blank on some W-2s while omitted and incorrect W-2 Verification Codes will not delay return processing during the test. The code will not be included in forms or submitted by payroll providers to the Social Security Administration or state and local departments of revenue.

The pilot will not affect state and local income tax returns or paper federal returns.