Even split into two posts, this is still a long entry, but it’s better than reading the even longer document ( (44 pages!) on this issue.
Employers & Illegal Immigrants
The U.S. Department of Homeland Security (“DHS”) is the agency that issues "no-match" letters. If you’re an employer and you have never received a “no-match” letter from the Social Security Administration (“SSA”), consider yourself lucky and read on anyway. If you have gotten one or more of these letters, or if you suspect that at least 0.5% of your workforce consists of undocumented workers, read on.
In June 2006, DHS issued a notice that it intended to issue a rule designed to interfere with the ability of illegal immigrants to get jobs in America. Currently there are between 11 and 12 million illegal immigrants living in the U.S., and about 8 million illegal immigrants working here. Agriculture, service and construction are the industries that are believed to have the highest number of undocumented workers, but any company that has received mismatch letters from the SSA or a DHS “notice of suspect document” in the past should be paying close attention to this safe-harbor rule, issued by DHS in August 2007.
The rule is called "Safe-Harbor Procedures for Employers Who Receive a No-Match Letter."
What’s A No-Match Letter?
Employers file W-2 reports with the IRS every year reporting their employees’ wages and withholdings. The reports include employees’ names and social security numbers (“SSNs”). The Social Security Administration (“SSA”) issues SSNs and has a database of the numbers, and the name and earnings associated with each number. Each year, the SSA sends letters to employers who have at least 10 employees whose names and social security numbers don’t match the names and numbers in the SSA’s database, if the mismatches constitute more than 0.5% of the W-2s in the employer’s annual wage report.
That letter is called a “no-match” letter.
What Was The No-Match Process Before The New Rule?
Action by the employer to correct mismatches was voluntary. In the no-match letters, the SSA simply asked the employer to check its own records for accuracy and report back if it found the reason for the problem. If the employer did not find a discrepancy in its own records, the employer was advised to tell the employee that there was a problem and encourage the employee to go to the social security administration to get the problem corrected.
Stay tuned for more. Part 2 will address what the safe-harbor procedure provides and why it's so important to you.