If an employer who has a SIMPLE IRA in place,lets an employee defer $6500 instead of $6000 (it was supposed to be $250 for 24 pay periods, but they have 26 pay periods), does the W-2 need to be corrected to reflect the $6000 max allowed? It seems if the W-2 gets corrected AND a 1099 is issued, the employee will be double taxed on the excess.

The return of the excess is not taxable. Any gain removed (required if before due date) is taxable and probably subject to the 25% penalty. I sugest that employer provide letter of explaining excess so that employee can show it to trustee/custodian and request that "an excess contribution" is being removed. [Note: there are no citations or IRS provided rules; but are my best educated guess. I do concurr with incluion on the W-2, otherwise employer subject to 10% penalty for a nondeductible contribution.] Trustee can split the amount being distributed (excess and gain).