As an employer, you’ll need to get a lot of information from your employees in order for them to start work. Besides their names, for tax purposes the most important piece of information is their social security numbers. This article goes into the employer’s specific responsibility to get an employee’s social security number, along with best practices and methods of verification.
First off, an employer has a legal obligation get a minimum of both an employee’s name and social security number, including those of resident and nonresident aliens. Best practices dictate that the way to do this is to make the employee bring his or her social security card to you so that you can make a photocopy of it. This isn’t mandated, but again it’s a best practice because then you have concrete evidence that at least the employee has presented a social security number to you that’s purportedly his or hers. The requirement for both a name and social security number for an employee is immutable because if either is incorrectly presented on a Form W-2, the employer may have a fine imposed upon them by the IRS.
If an employee does not have a social security card to present to you, that employee can get one through filling out and submitting a Form SS-5, Application for a Social Security Card, to the Social Security Administration. The employee is responsible for filling out and submitting the application, but the employer might be asked to supply a letter explaining the need for the social security card if the applicant has already eclipsed his or her yearly or lifetime limit on cards.
What happens if the employee has the right to work in the United States but has no social security number at the time you are submitting your Form W-2 to the IRS? In that case write “Applied For” in the space provided for the digits if filing a paper form, and enter zeros (i.e. 000-00-0000) in the case of electronic filing of your Forms W-2. Later, when the employee receives his or her social security number, file a Form W-2c, Corrected Wage and Tax Statement, to supplement the original form with the social security number. Send copies B, C, and 2 of Form W-2c to the employee after filing the original with the IRS.
This same revision and correction process goes for employee names in that, if a name is being used but is outdated on employee tax documents, honor the name on the most recent social security card. When a new card is issued, then change the name in the employer’s records along with the eventual W-2. If a W-2 was sent to the IRS under the old name, correct it by sending a Form W-2c, making sure to send the employee copies as well. Note though that for all prior Forms W-2 filed before the most recent one, there is no need to correct the former name of the employee.
What if an employee presents an alternative federally recognized number indicating his or her identity, such as an individual taxpayer identification number (an “ITIN”)? The answer is: An employee that presents an ITIN is also tacitly admitting that he or she cannot legally work in the United States. This is because only those with social security numbers have the right to work. This therefore presents itself as an easily recognizable sign that someone cannot work for you. However, if they have an ITIN but recently received the right to work, then have that person apply for a social security card as was previously described in this post. Basically, individual taxpayer identification numbers function as tax identifiers for those that cannot legally work in the United States, with these numbers always starting with the digit nine, and as such appearing as follows: 9XX-XX-XXXX.
What if you’re concerned that someone is trying to work for your business when they are not legally able to work in the United States? You should verify his or her purported social security number to check as to whether the number given corresponds to the name of the potential employee. This can be accomplished through use of the Social Security Number Verification Service. As an employer, in order to use the Social Security Number Verification Service, you must register with the Social Security Administration here. You can also use e-verify to make sure that a potential employee has the right to work in the United States.
If you’re having tax issues pertaining to employee information gathering, call Dino Tax Co today at (713) 397-4678 or email firstname.lastname@example.org. Your first phone consultation with us is always free. Finally, if you like us, do it on Facebook here.