Tax and Payroll Preparation Services

Get the Details Right: Verify Social Security Numbers - 02/06

W-2 forms contain two pieces of information that must match: An employee's correctly spelled name and Social Security Number. If they don’t match, you can count on some problems. Take a look the most common errors, proactive steps to avoid them and ways you can verify this vital information.

Let's say an employee comes into your company's payroll office complaining that she just received a letter from the IRS. Her tax refund has been held up due to a discrepancy with her Social

2006 W-2 Deadlines
for Employers

January 31 - Give employees their copies of Form W-2 for 2005. If an employee agreed to receive Form W-2 electronically, have it posted on a Web site and notify the employee of the posting.
February 28 - File Form W-3, Transmittal of Wage and Tax Statements, along with Copy A of all the Forms W-2 you issued for 2005. If you file Forms W-2 electronically (not by magnetic media), your due date for filing them with the SSA will be extended.
March 31 - If your company electronically files (not by magnetic media), submit Copy A of all the Forms W-2 you issued for 2005. Despite this extension for electronic filers, the due date for giving the recipients these forms remains January 31.

Online Verification

    Employers have two online options for using the Social Security Number Verification Service (SSNVS) to match employee names to their Social Security Numbers:
    1. Verify information for as many as 10 employees and get immediate results.(This can be helpful when checking information on new hires.)
    2. Upload and verify the data for up to 250,000 employees and get results usually the next federal government business day. (Depending on how many employees your company has, this option allows your entire payroll database to be checked at once.)
    To get started, follow three steps:
     Register by clicking here. Once you complete the registration, SSA will verify your identity against its records and assign a PIN.
     Use your PIN to request an Access and Activation Code, which will be sent to your company.
     Log in to the SSNVS.
    For more information, read this pamphlet.

What the Numbers Mean

    The numbers on Social Security cards aren't just random selections of digits — they contains bits of information:
The first three digits indicate the first three digits of the mailing address zip code listed on the original application. For example, the number for an application from a Florida zip code will begin with numbers ranging from 261 to 267, while a New Hampshire applicant's number will start with digits ranging from 001 through 003. (Before 1973, the zip code came from a Social Security office in the state.)
   The middle two digits serve administrative purposes for each state.
    The final four digits simply run consecutively from 0001 through 9999.
    About 5.5 million new Social Security Numbers are issued annually. Does the agency reuse numbers of deceased individuals? No. The SSA says the current system will allow unique numbers to be assigned for generations.
Security Number (SSN). Another employee then complains that his tax return was kicked back to him because the IRS says the Social Security Number on his W-2 form is either invalid or belongs to someone else.

After some investigation, your company makes two discoveries: The first employee neglected to inform the Social Security Administration (SSA) of a name change when she got married. The second employee has messy handwriting that resulted in a zero being mistaken for a six when entering his information into the payroll database.

These types of errors are not unusual and they underscore the need to verify the accuracy of employees' names and Social Security numbers. Unless those two pieces of information match, the government cannot accurately keep track of an individual’s earnings.

Names and Social Security Numbers are not only important for paying taxes but also for determining a person’s Social Security benefits, Medicare benefits and Unemployment Insurance.

Generally, when there are errors on W-2 forms, it is up to your company to take the time to solve the problems. So it's smart to ensure that the information matches from the outset.

Among the most common mistakes, according to the SSA, are transcription errors, typos, incomplete or blank names or numbers, and name changes that go unreported. To help prevent these errors, take the following steps:
 When staff members at your company take an employee's name and SSN, have them repeat the number and spelling to the employee to ensure accuracy.

 Ask employees to verify the information again once it is entered in your company’s payroll records.

 When W-2 forms are issued, have employees double check the information one more time. If there is an error, there is still time to issue a corrected W-2 before mailing copies to the government.

 When employees get married or otherwise change their names, remind them that they must notify the SSA.

If you haven’t taken these steps or simply want to double-check your records, there are several ways to verify the information with the SSA, depending on the quantity of data:

Five Names - You can verify the information on up to five employees by telephoning the SSA. Have the following information at hand when calling:

 Company name,
 Your Employer Identification Number (EIN),
 Employee SSN,
 Employee’s last name, first name, and middle initial if applicable,
 Employee’s date of birth and
 Employee’s gender.

Fifty Names - To verify the information on up to 50 employees, your company can submit a paper list with the above data to the local Social Security Office.

More than 50 Names - Your company will need to submit a simple registration form to use the agency's Employee Verification Services (EVS) in order to verify this number of employees or to submit data on magnetic media. This service can be used both by employers and by third-party submitters. See the instruction booklet for information and requirements.

Online - You can verify the information for up to 10 employees immediately, or up to 250,000 employees within one federal government business day by using the agency’s Social Security Number Verification Service (SSNVS).

While the other verification methods can be used to check on information before you actually hire someone, the online service can be used only after individuals become employees and only for wage reporting services. (See right-hand box above for more information on using the online tool.)

What if You Find an Error?

Suppose you already mailed W-2s to your employees and sent copies to the SSA. Then, you discover an error. What should you do?

First, you need to correct the information on Form W-2c and provide the employee with a copy as soon as possible. If the error involves only the employee's name and/or Social Security Number, fill out the W-2c through item i (do not complete boxes 1-20) and advise the employee to make the change on the original. You do not need to file a W-2c if the only error is the employee's address.

You also need to fill out a Form W-3c and send it, along with the top copy of the W-2c, to the SSA. The address is provided on the W-3c.

For more detailed information about fixing errors or if you need assistance, contact your tax adviser or payroll services professional.

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