IRS clarifies Social Security number penalties - HR News - what to do when employees' Social Security numbers on W-2 forms do not match government-issued numbers - Brief Article

HR Magazine, March, 2003 by Beth McConnell

In response to a letter from the American Society of Payroll Management (ASPM), the internal Revenue Service (IRS) has clarified steps employers can take to reduce penalties they incur when their employees' Social Security numbers on W-2 forms do not match the government-issued numbers.

The IRS told ASPM that employers who discover a mismatch by checking employees numbers through the Social Security Administration's Social Security Number Verification system may withhold tax from the employee's paycheck at the highest rate, which is single filing status with no exemptions, according to ASPM's president, Janet Tombow. The employer must then request a new Form W-4 from the employee.

"The person who has to fix the m mistake is the employee. In my opinion, [the IRS] is getting [employees'] attention by hitting them in their pocketbook," Tombow told HR News.

Tombaw says the employer' obligation provide correct employee Social Security numbers ends with the Form W-4. "Employers can't make sure [the number] is right if the employee is not honest. You can only get so much documentation," Tombow says.

During ASPM's Government Symposium in 2002, IRS officials told attendees that a $50 per W-2 penalty would apply to all 2002 W-2 forms with mismatched employee names or Social Security numbers. If the employer receives a notice from the IRS of a mismatch the employer must show the valid W-4 to avoid the penalty. Showing proof of using the Social Security Number Verification System also can help employers avoid a penal.

"It's a good compromise," Tombow says. The onus is placed back on the employee."

For more information, visit the Social Security Administration at www.ssa.gov/employer.>

COPYRIGHT 2003 Society for Human Resource Management

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