5 Facts About Social Security Employers Should Know
Including What to Do With an Error Correction Request Notice
Today, business owners, here's a test of your knowledge of Social Security, Social Security cards, and Social Security numbers. These are questions about Social Security that every business owner should know the answers to. It's true/false and the answers follow the questions, so you don't have to work too hard.
1. A Social Security Number Is the Same as a Tax ID Number
FALSE. A Social Security number is just one form of tax ID number. Other tax ID numbers are Employer ID numbers and other special numbers given to non-drivers and others.
2. A Sole Proprietor Can Use a Social Security Number as the Business Identifier
TRUE. Since a sole proprietor (owner) is not a separate entity from the business, the business identifier is the owner's Social Security number. The sole proprietor doesn't need an employer ID number unless he or she hires employees.
3. A Social Security Card Can Be Used to Verify Employee Work Eligibility
True, but not entirely. A Social Security card alone isn't enough to verify employee work eligibility. Verifying employee eligibility to work in the U.S. is a two-part process, involving both (a) establishing the person's identity and (b) establishing eligibility to work in the U.S.
The new hire can use a Social Security card to verify employment authorization, but he or she must also provide another document to establish identity. A Social Security card doesn't have a photo on it, so there's no way to verify identity with this card. The card must also be unrestricted, meaning it can't have restrictive wording on it, like "NOT VALID FOR EMPLOYMENT," "VALID FOR WORK ONLY WITH INS AUTHORIZATION" or "VALID FOR WORK ONLY WITH DHS AUTHORIZATION."
4. The Employee Doesn't Need to Have an Actual Social Security Card as Proof of the Number.
True. The IRS just says "You should ask your employee to show you his or her social security card. The employee may show the card if it is available." You also don't have to make a copy of the card.
5. You Can Hire Someone Who Doesn't Have a Social Security Number
FALSE. All new hires must complete Form W-4 before receiving their first paycheck, and a Social Security Number must be specified on the form. The IRS says, "Do not accept an ITIN in place of an SSN for employee identification or for work. An ITIN is only available to resident and nonresident aliens who are not eligible for U.S. employment and need identification for other tax purposes. You can identify an ITIN because it is a 9-digit number, beginning with the number "9" and is formatted like an SSN (NNN-NN-NNN)."
5. Social Security Numbers Indicate the State Where the Number Was Received
Not anymore. The Social Security Administration is initiating a new randomization process to "extend the longevity of the nine-digit SSN nationwide," so numbers issued after June 25, 2011, won't be tied to a specific state.
6 My business received a Social Security Number "No Match" Letter from the Social Security Administration. I must have done something wrong.
Not at all. Mistakes happen. It could have been a typo, an employee name change that wasn't reported, or your records might not be complete. Most important: Don't take any action against the employee. Laying off, suspending, firing, or discriminating against the employee could be a violation of State or Federal law.
To correct the error, you'll need to register with the Social Security Administration's Business Services Online system. Then follow the instructions in the letter to make the correction. Be sure to make corrections within 60 days from when you received the letter.
How to Verify Social Security Numbers Online
The Social Security Administration allows you to verify Social Security numbers online. If you receive a Social Security card from a new employee and you aren't sure if it's real, or if the employee doesn't have a card or forgot the number, you can verify the number online. To use this service, you must enroll in the Social Security Business Online service. Then enter the number and get an immediate response.
IRS. International Taxpayers. "U.S. Taxpayer Identification Number Requirement." Accessed Oct. 4, 2019.
IRS. "Form SS-4 and Employer Identification Number Frequently Asked Questions." Accessd Oct. 4, 2019.
US Customs and Immigration Service."List C Documents" Accessed Oct. 4, 2019.
IRS. Publication 15 (Circular E). "4. Employee's Social Security Number (SSN)." Page 14. Accessed Oct. 4, 2019.
Social Security Administration. "Social Security Number Randomization Frequently Asked Questions." Accessed Oct. 4, 2019.
Social Security Administration. "Employer Correction Request notices (EDCOR)" Accessed Oct. 4, 2019.