The following is a guest blog post by Anna Marie DiStefano, Manager, Tax & System Compliance at PrimePay.
When an employee begins a new job, employers are required to obtain an employee’s Social Security Number. An employer has an obligation to ask for Form W-4, Employee’s Withholding Allowance Certificate, from a new employee. On January 3, 2011, the Internal Revenue Service (IRS) released the 2011 W-4 form.
What Does an Invalid Social Security Number Look Like?
Have you ever wondered if there are certain digits that are not valid in a Social Security Number? The following are examples of invalid SSNs. As of June, 2010, the Social Security Administration (SSA) had never issued these Social Security Numbers:
- SSN’s having “000” or "666” as the first three left-most digits
- SSN’s equal to or greater than “773” as the first three left-most digits
- SSN’s having “00” as the fourth and fifth digits
- SSN’s having “0000” as the last four digits
How Can Employers Verify Social Security Numbers?
The Social Security Number Verification Service (SSNVS) is a free Internet-based system operated by the Social Security Administration (SSA) that allows an employer to confirm whether an employee's name and Social Security Number (SSN) match the SSA's records.
SSNVS is a useful, optional way for employers to identify potential discrepancies and correct SSNs before receiving penalty notices. Under the Internal Revenue Code, if Form W-2 does not contain the employee’s correct name or social security number, the employer may be penalized up to $50 for filing an incorrect Form W-2.
Reminder: The Social Security Administration (SSA) uses the SSN plus the first seven characters of the employee’s last name on Form W-2 to post Social Security wages and Social Security tips to a worker’s Social Security earnings record.
What is E-Verify and How is it Different from SSNVS?
E-Verify is a free Internet-based system that is operated by the Department of Homeland Security (DHS) in partnership with the Social Security Administration (SSA). It allows participating employers to electronically verify that their new hires are authorized to work in the U.S. by comparing information on Form I-9, Employment Eligibility Verification, with Federal government databases. E-Verify validates that your new hire is legally eligible to work in the United States. The Social Security Number Verification Service confirms whether an employee’s name and SSN match the records that the SSA has on file.
Why Employers Should Use E-Verify and the Social Security Number Verification Service
E-Verify is used at the time of hire. SSNVS is used after an official employer-employee relationship has been created, such as when an employee accepts a job offer, or when the employer is preparing and submitting W-2 forms. The use of SSNVS will help employers reduce the number of Forms W-2c, Corrected Wage and Tax Statement that they file after the W-2 season. For example, using SSNVS, an employer will be able to resolve a discrepancy in an employee's name (e.g., after a marriage) that occurred after the E-Verify system had confirmed that the employee was legally authorized to work in the United States.