'send' is correct.
Answer is 3 coz of 'its'

Ans: 3

E is the answer. Correct?

I'm between C and E, Don't know why you say E is out!!
Mandates that or just mandate?

dextar wrote:IRS provision 354-B mandates that an S corporation with assets of greater than $200,000 send W-2 forms to their full- and part-time employees on or before January 31.

I trimmed a lot of fat from the question: "Provision mandates that a corporation...send forms to...their employees...on X date." When we rephrase the sentence in this way, we see that there is an agreement problem in the original question. We have to either change "corporation" to "corporations" or change "their" to "its".

The answer should be C. Choice E changes the meaning of the original sentence.

As per MGMAT Sc, the correct Command Subjunctive construction structure is :

Command Subj.= Bossy Very+ That + Subject of the sentence + Command Subjunctive.

Also, the command subjunctive eliminates the -s from singular verb forms and also with an infintive it uses the bare form of the verb."Mandate" falls into command subjunctive form and not infinitive form (these usages have to be kept in mind as they are purely idiomatically based).

P.S I have this slight problem with option C as it uses " assets of greater than " whereas it could have been better said that "assets greater than" . Experts your comments are highly solicited please.

please refer manhattun sc for explanations on subjunctive mood.
here r few examples of subjunctive mood from man sc.

1)it is urgent that she sign the permission slip.
2)my advice is that he simple love her for who she is.

in the above two examples, using signs & loves (singular verbs) would be incorrect.

hence IMO C.

IRS provision 354-B mandates that an S corporation with assets of greater than $200,000 send W-2 forms to their full- and part-time employees on or before January 31.

(A) that an S corporation with assets of greater than $200,000 send W-2 forms to their full- and part-time employees (their should be its)
(B) an S corporation with assets of greater than $200,000 send W-2 forms to their full- and part-time employees (same mistake as in option A)
(C) that an S corporation with assets of greater than $200,000 send W-2 forms to its full- and part-time employees (Correct)
(D) an S corporation with assets of greater than $200,000 to send W-2 forms to their full- and part-time employees (weird)
(E) an S corporation with assets of greater than $200,000 send W-2 forms to its full- and part-time employees

Option C

mandates that seems to be better. so Answer is C

if we need to choose E , It should be ==== mandates an S corporation. ....... to send ....

I think to is missing in E which makes it wrong.