Send another copy of the W3 and W2 to the IRS.  Do you have other employees?  Does the IRS have their W2s?  Did you efile them originally or maybe you mailed it to the wrong place.

I filed the taxes correctly in January. Wouldn't this be an issue on the employees end? No issues with the company's taxes or other employees W2's.

Oh, did the employee not include this W2 on his tax return?  Then that is an issue between him and the IRS.  Nothing you can do about that except give him another copy of it if he needs one.  Maybe he never got the original W2 or lost it.  Sounds like he didn't report it on his 1040 tax return.

He filed his taxes and included the W2. The IRS is just saying they don't have a record of it.

Then he can just send them a copy of that W-2.

Your other employees might not have been caught by the match yet, if this was a global problem on your account.  Or it may just be a database error by the IRS (they lost it).

Did you file your W-2s and W-3 electronically or on paper?

I would start by checking your submission and make sure that this employee's name, address and SSN are correct on your copy of the filed information.

I really don't know whether you should send an entire new filing, or just send a W-2C to the IRS and the employee (that way you get it in the system without it being a duplicate), or just send an original W-2.  You don't want the IRS to suddenly go from thinking there is no W-2 to thinking there are two with twice as much income.

You might want to ask an enrolled agent for advice, or try calling the IRS yourself.

My gut feeling is to send this employee and the IRS a W-2C.

Meanwhile, the employee should be able to send the bank a copy of the W-2 even if the IRS transcript doesn't match it.  The bank may also accept a certified letter from you as income verification.

An employer files Forms W-2 with the Social Security Administration, so perhaps check with the SSA to see if they received the W-2 and forwarded it to the IRS.

If the IRS has reason to question W-2 income or tax withholding information embedded in an individual's e-filed tax return, the IRS usually asks to the individual to provide a copy of the W-2 that the individual received from the employer.

A lender does not need a W-2. What they want, is a copy of the 2016 tax return. So the prospective borrower just needs to print out their 2016 return and sign it. If married the spouse needs to sign it to. Then that's what gets provided to the lender.

A lender may not need the W-2, but most lenders in my area insist on one, as anyone can type up a fake 1040.

Just as one can type up a fake W-2, or any other form anyone may want.

To assist your employee, send him another copy of the W-2 to show to the bank.

You could also write a letter of employment on company letterhead.