More on SS No-Match Letters

As reported previously by GT, the Social Security Administration began to issue an increased number of no match letters. This occurred when information regarding social security numbers presented by employees did not match the identifying information in the SSA system.

The IRS is very interested in the no match issue from a taxation standpoint. Although regulations have not been issued, yet, it is believed that the IRS will begin auditing companies that have had a significant number of social security number mismatches. A formula will be determined based on the number of employees with mismatched numbers and the percentage of the workforce with problems. It is possible that the audits will begin by reviewing the 2003 and 2004 tax returns.

The IRS claims that the purpose of this program is to educate and encourage compliance. For this reason, penalizing first time offenders or those violators who are making an effort to remedy problems is not expected to occur.

As more information is available on this issue of IRS audits, Greenberg Traurig will provide updated information.

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