“What does it cost to fix Box 12?” is nearly always asked about the reconstruction — the price of getting someone to work out the right figures. That is the part with a quote attached, so it is the part that gets compared. It is also the part that moves least.
The two costs that actually vary with when you act are the information-return penalty and the correction. Both are published by the IRS, both scale with headcount rather than with how wrong any single figure is, and both get cheaper the earlier the error is found. Taken in order:
1. The penalty, if the figure is filed wrong
A wrong Box 12 code TT figure is an incorrect information return. It falls under the general information-reporting provisions rather than any rule specific to the new codes, and the amounts are published per return and indexed each year. For returns due in 2026, the IRS publishes:
| When it is corrected | Per return |
|---|---|
| Up to 30 days late | $60 |
| 31 days late through August 1 | $130 |
| After August 1, or not filed correctly at all | $340 |
| Intentional disregard | $680 |
Two things about that table are routinely missed. The first is that it is indexed annually, and the row above is the one for returns due in 2026. The 2026 Forms W-2 carrying codes TT and TP are due 1 February 2027, so the amounts that will actually apply to them are the returns-due-in-2027 figures — which the IRS has not published yet. The 2026 row is the best available guide to the order of magnitude, not the final number. Anyone quoting you a precise 2027 penalty is quoting a figure that does not exist.
The second is that §6721 and §6722 are separate provisions. Section 6721 covers the failure to file a correct return with the SSA. Section 6722 covers the failure to furnish a correct statement to the employee. One wrong Box 12 figure produces both, because the same number goes on both copies. The per-employee exposure is the pair, not one of them.
Maximum annual penalties differ for small businesses and large businesses, and there is no maximum at all for intentional disregard. We are deliberately not printing a ceiling here: the small-business threshold and its cap are the part of this that we could not verify from a primary source on the date at the top of this page, and a remembered cap is a wrong cap.
2. The correction, if it is caught after filing
The correcting form is Form W-2c. The current revision, Rev. 1-2026, carries codes TT and TP, so a Box 12 code TT error is correctable on the standard form rather than needing anything unusual. That is the good news.
The cost is not the form. It is that a W-2c goes to the employee as well as the SSA, and the employee may already have filed a return claiming a deduction off the original figure. The qualified-overtime deduction is capped at $12,500 ($25,000 joint) and the qualified-tips deduction at $25,000, both phasing out above $150,000 MAGI ($300,000 joint) — so an overstated code TT can produce an overstated deduction that the employee has to unwind on their own return, at their own cost, on your correction notice.
That is the asymmetry worth planning around. The penalty is yours and it is bounded and published. The downstream cost lands on the employee and it is neither.
3. The reconstruction itself
This is the part with a quote, and it is the one you can size in advance, because the scope is arithmetic rather than judgement. To derive code TT for one employee you need, for each pay period already run, the overtime hours separated from straight time and the regular rate as actually computed for that period — including any non-discretionary bonus, shift differential or commission that folded into it. That is worked through in the guide on why code TT is the premium and not total overtime pay.
So the unit of work is employees × pay periods, not employees. A 40-person shop on a semi-monthly cycle has already run fourteen periods by the end of July; the same shop weekly has run thirty. The headcount is the number people quote off, but the pay frequency is what actually sets the size of the job — which is why an hourly estimate from anyone who has not seen your register is a guess.
Truing prices this at $350 minimum, then $8 per employee, regardless of pay frequency. The minimum covers up to 43 employees. What comes back is a per-employee workbook showing the derivation for every figure, a W-2 import file, a method memo, an exceptions report naming what could not be derived, and a reconciliation back to the register totals.
Why the order matters more than the total
Set the three against each other and the sequencing is the whole argument. The reconstruction is a fixed, quotable cost you can incur today. The penalty is a per-return, per-provision cost that only exists if a wrong figure is filed, and whose cheapest tier is the one that closes before anything reaches the SSA. The correction cost is the one you cannot price, because most of it is not yours.
Nothing about that is specific to Truing. An in-house reconstruction that finishes before 1 February 2027 avoids exactly the same two costs. The case for doing it now rather than in January is not that it is cheaper to buy — it is that January is when the register export you need is hardest to get and the tier table is least forgiving. Who else you might buy it from — your payroll provider, a national tax firm, your accountant — is set out in the guide on the four options.
Finding out where you actually stand
The variable nobody can quote against is whether your register even holds what the derivation needs. The free readiness check reads a payroll register export and counts how many of your employees can be classified from the data you already have — before anything is bought, and while there is still time to pull a better export. The register is read in the request and not stored.
If the answer is that most employees are derivable, the reconstruction is a known cost. If it is that they are not, that is worth knowing in July rather than in January — the fix is a better export, and payroll platforms are considerably more responsive about producing one outside of year-end.
The tips side of this works differently, because code TP carries cash tips as reported rather than a figure you derive. That distinction, and what it means for what you owe the employee, is in the guide on code TP.
Penalty amounts, the §6721 / §6722 split, the Form W-2c revision, the 1 February 2027 due date and the deduction caps were each verified against IRS primary sources on 30 July 2026. Amounts for returns due in 2027 were not published as of that date and are not claimed here. Nothing on this page is tax advice.