Social Security Cards & No Match Letters

On May 24, 2002 GT reported that the Internal Revenue Service (IRS) is working on a proposal that would fine employers that file W-2 wage and tax statements with incorrect and mismatched social security numbers. Penalty fees would begin at $50 per incorrect or incomplete return, but the fee can increase significantly if the IRS believes the employer's actions are intentional. Mismatched social security numbers are a great source of incorrect wage information. It now appears that this policy could go into effect in June 2004 for W-2s issued for tax years starting in 2002.

Many employers are now receiving "No Match" letters from the Social Security Administration (SSA). These letters notify employers that Social Security numbers provided by the employer for specific individuals do not match the name in the SSA’s data base. The SSA sends the letters to ensure that their records are accurate. Their goal is to ensure that each employee receives proper benefits. The agency’s efforts in this respect have increased, as reflected in the number of letters sent out so far this year. Last year 110,000 No Match letters were sent; in 2002, to date, the agency has mailed 750,000. The main stated reason for the increase is that SSA is now sending a letter to employers where one of more employees have numbers that do not match; in past years, letters would only be sent where there were ten or more employees with non-matching SSNs. Many suspect, however, that increased scrutiny of foreign nationals is also involved.

In light of the SSA’s increased vigilance and IRS’ plans to fine employers, these letters now pose an additional liability and responsibility on employers to ensure that correct information is obtained and proper documentation is provided when an individual is hired. In part, this means that correct and complete I-9 verification and documentation will be essential in limiting an employer’s liabilities as they relate to employment of individuals who do not have employment authorization.

Furthermore, employers should also be careful in the way they respond to such "No Match" letters. The letters request a correction of the error; it does not automatically imply that the referenced individual does not have employment authorization or that the individual is an "illegal alien." In fact, the letters explicitly state that they do not constitute this kind of notice, and such a presumption could lead to employment discrimination issues. Therefore, it is very important for the employer to ensure that the referenced individual is not automatically fired without attempting to resolve the matter, while ensuring that the company does not run afoul of various employment discrimination laws, including national origin discrimination.

Finally, while the SSA does not currently share information with the Immigration and Naturalization Service (INS), the IRS may refer such cases to the INS. In turn, the INS may audit or raid employers believed to be willfully employing undocumented workers.

As various agencies emphasize proper documentation and recordkeeping internally, it is becoming even more important for employers to follow suit and ensure that their employee records are properly completed and maintained. Internal I-9 audits are one way to gauge the company’s current standing and liabilities with respect to employment of individuals who may either be undocumented or lack proper work authorization. Greenberg Traurig’s immigration team can assist in setting up various levels of audits. Proactive review of these issues is key in avoiding fines and penalties. Please contact us to discuss your company’s needs.

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