• Names and Social Security Numbers on W-2s are IMPORTANT!

Accurate names and Social Security numbers (SSNs) on W-2 reports are important to you and your employees.  Why?  Two important reasons:
• The Social Security Administration (SSA) uses the name and SSN to maintain a lifetime record of personal earnings for each of your employees.  Generally, we are not able to credit an employeeís Social Security record with his or her earnings unless both the name and SSN reported on the Form W-2 agree with our records.  It is vitally important that these records are correct because we will later use them to decide if the individual can receive Social Security payments and the amount of any payments due.
• The Internal Revenue Service (IRS) uses W-2s to enforce the tax laws, and they could penalize you or your employees for providing incorrect information, including taxpayer identifying information.  Under the Internal Revenue Service Code, the IRS may charge you a $50 penalty for each time you do not furnish an employeeís correct SSN on a wage report.   They may also charge the employee a $50 penalty for each time the employee does not furnish his or her correct SSN to his or her employer.   The IRS may impose these penalties unless you or the employee can show reasonable cause for not providing the correct information.

• Reasons for Errors

The most common reasons reported information doesnít agree with our records may include, but are not limited to:
• Payroll record transcription or typographical errors
• Incomplete or blank name reported
• ·Incomplete or blank SSN reported
• ·Name changes

CAUTION:  None of these imply you or your employee intentionally provided incorrect information about the employeeís name or SSN, and is not a basis, in and of itself, for you to take any adverse action against the employee.  Any employer that uses SSA mismatches as a pretext for taking adverse action against an employee may violate state or federal law and be subject to legal consequences.

• How Can You Prevent Errors?

Before you file W-2s each year, use the tips below.  Theyíll help make sure your employment records have each employeeís correct name and SSN and the information gets put on each W-2 accurately.
• Ask your employees to check their latest Forms W-2 against their Social Security cards and to inform you of any name or SSN differences on the two.  If the Form W-2 is incorrect, correct your records.  If the card is incorrect, advise the employee to contact a Social Security telephone service representative at (800) 772-1213.  (Most changes can be made quickly, and the employee will receive a replacement card within 10 days showing the correct information.)
• Remind your employees near the end of each year to report to Social Security name changes due to marriage, divorce, or other reasons.
• Ask each new employee to check his or her Social Security card and inform you of the name and SSN exactly as shown on the card.  (While the employee must furnish the SSN to you, the employee is not required to show the Social Security card.  But seeing the card will help ensure that all records are correct.)
• Direct those who do not have an SSN or have lost their cards to contact a Social Security telephone service  representative at (800) 772-1213 to apply for a number or replacement card.
• A valid SSN must have a total of nine digits.  The first three digits are referred to as the area, the next two as the group, and the last four as the serial.  No SSNs with a 000 area number, or an area number in the 800 or 900 series, have been issued.  Also, no SSNs with a 00 group or 0000 serial number have been issued.
• We encourage you to use SSAís Enumeration Verification Service (EVS) when employees are hired, prior to submitting Forms W-2 to SSA for processing.  EVS is a free, convenient and secure method for employers to verify that employee names and SSNs match SSAís record.  (It is not to be used to screen job applicants.)  You may call our toll free number for employers,  (800) 772-6270, for further details.
• If your Forms W-2 are filed on magnetic media or electronically, be sure all your employees' names in the "Employee Wage Record" are shown according to the name code in the "Employer Record."  For more information, see one of these Social Security publications:
• SSA Publication 42-007 (TIB-4), Magnetic Media Reporting
• MMREF-1, Magnetic Media Reporting and Electronic Filing
• SSA Publication 31-011, Software Specification and Edits for Annual Wage Reporting
• If your Forms W-2 are filed on paper, enter your employeesí names on the Forms W-2 as follows: first name, middle name or initial, and last name exactly as shown on their Social Security cards.  For more information, see
• IRS Publication 393, Federal Employment Tax Forms
• SSA Publication 16-004, Employerís Guide to Filing Timely and Accurate W-2 Wage Reports.

The Social Security Administration (SSA) sometimes needs to write to an employer about a problem that needs attention.  The letters below describe problems and what SSA expects the employer to do.  We hope these guidelines will help you reply to SSA.

SSA cannot process W-2 magnetic tape or diskette reports with serious errors.  One such error relates to employee names and Social Security numbers.  If more than 50% of the employee names and/or Social Security numbers donít match SSA records (or 5,000 or more donít match, regardless of the percentage), SSA rejects the report.  Matching will fail for any of the following reasons:

1. A valid number was on the W-2, but the name doesnít match the name of the person the number belongs to, according to SSAís master records.
2. An impossible number was on the W-2 (SSA has never issued it to anyone).
3. The W-2 showed no Social Security number.

Take the steps below, then follow the letterís instructions for resubmittal carefully.  IMPORTANT:  Make sure the TLCN (Tape Library Control Number) is shown on the magnetic tape or diskette label and it gets back to SSA within 45 days of SSAís letter.

• Telephone SSA at (800) 772-6270 SSA when you get the letter.
• This is a brief call, but needs to be done right away, to let SSA know you received the letter and magnetic tape or diskette and are working on the problem.
• Make sure the computer program you used to make the magnetic tape or diskette has no errors that caused the problem.
• If necessary, seek help from the programmer or software company that wrote the program.
• If this was the cause of the errors, then, after fixing the software, re-run the W-2 program to make a new magnetic tape or disk, and resubmit it to SSA.
• Make sure hiring documents were checked and entered into the computer correctly.
• You are not expected to do a complete review of payroll records if documents were examined and entered carefully at the time of hiring.  But if name and/or Social Security number errors on payroll records are found, correct them.  After that, re-run the W-2 program to make a new magnetic tape or disk, and resubmit it to SSA.
• When you are sure both your program and payroll records are correct, resubmit the report, asking SSA to "force" it, if necessary.
• If your records and program are correct, information some employees gave you probably caused the problem.  Call SSA at (800) 772-6270 before you resubmit and ask them to force the report to process when it is received. Correct other errors the letter shows (besides name/Social Security number errors) before you resubmit.
• Expect to be contacted by the manager of your local Social Security office shortly after the report is processed.  He or she will discuss this problem with you and explain SSAís free service to verify names and Social Security numbers employees give you.

If SSA finds 10% or more of the W-2 names and/or Social Security numbers on any employerís W-2 report donít match SSA records, SSA sends the employer a letter and lists up to 250 of the problem ones.  (This letter is not sent to employers whose report was rejected and later forced.)  The point is to ask the employer to review hiring and recordkeeping practices and work on improving accuracy of future reports.

Contact the manager of your local Social Security office to request assistance in verifying employee names/Social Security numbers, including a complete list of unmatched names/Social Security numbers if there were more than 250.

SSA sends a letter when W-2 totals for a tax year are discrepant with Form 941/943 reports made to Internal Revenue Service (IRS) that year.  The employer is asked to investigate and reply.  A questionnaire enclosed with the letter explains whether the problem is

1. missing W-2ís (SSA has no record of receiving W-2ís for the year shown), or
2. discrepant totals (W-2ís were received, but the totals of Social Security and/or Medicare wage are less than Form 941/943 totals for the year).

Call SSA at (800) 772-6270 if you have questions.

Complete the questionnaire and return it to SSA along with missing W-2ís, W-2cís (for W-2 corrections), or other explanations you believe will resolve the problem.  You may need to send 941/943 corrections to IRS also.

SSA sends employers letters about individual employees for several reasons.  The most common simply asks the employer to confirm how much the worker was paid.  Others may ask the employer to verify that the name and Social Security number was entered on the W-2 correctly (because, for example, the number belongs to a child under age 7 or the name doesnít agree with Social Securityís records).  Each letter tells the employer what information SSA needs, includes a phone number for help, and gives an address for reply.

Web Site:  SSA --http://www.ssa.gov/employer_info   Toll-Free Telephone:  (800) 772-6270 (Information)
Web Site:  IRS -- http://www.irs.gov/prod/bus_info   Toll-Free Telephone:  (800) 829-3676 (Forms only)
 

A bill signed by Governor Davis in 1999, in effect, broadens the "New Employee Registry Program" (EDD Form DE 34) to include independent contractors.  Attached to voluminous SB 542 (Burton, D-San Francisco), a bill recasting "the implementation and administration of procedures for securing child and spousal support and determining paternity," is a striking amendment to the Unemployment Insurance Code.

Effective January 1, 2001, California agricultural and other businesses that are "service-recipients" must report to the EDD in Sacramento the full name and social security number of  "service-providers" (such as farm labor contractors) that they pay $600 or more for services (and report on IRS Form 1099-MISC).  The "service-recipient" must also report his or her own name, business name, address, telephone number, federal employer identification number, California employer account number, social security number, "or other identifying number as required by the Employment Development Department in consultation with the Franchise Tax Board."

Service-recipients must also provide "the date the contract is executed, or if no contract, the date the payments in the aggregate first equal or exceed $600" and the total dollar amount of the contract, if any, and the contract expiration date.  Information will be retained until November 1 following the tax year in which the contract is entered into, or if no contract, the tax year in which aggregate payments reach $600.

Service-recipients (sole proprietorship, partnership, corporation, association, or government agency or institution) must report required information within 20 days of the earlier of first making payments that in the aggregate equal or exceed $600 in any year to a service provider, or executing a contract or contracts with a service-provider providing for payments of $600 or more in any year.

Information obtained "may be released only for purposes of establishing, modifying, or enforcing child support obligations."  An EDD representative in Sacramento said the agency is preparing forms and instructions they will send to employers "in about 2 months."