Nearly every American citizen has one, but it can be difficult sometimes for people to remember their Social Security number. This is especially true when under pressure to complete important employment documentation or when the physical card is unavailable for verification. Although gaining access to the correct number can be tricky for companies and their payroll teams, it’s crucial for leadership to make this element a priority. Failing to do so can have serious consequences for organizations. Let’s take a look at two common examples:
Rejected year-end filing
The IRS is known for being strict on annual returns. The organization requires companies to provide accurate data and complete every necessary section of federal paperwork. Missing or invalid employee Social Security numbers are a big mistake on government filings. Falling victim to this action could result in rejected returns. As a result, businesses will then be late completing correct filing and will be subject to IRS penalties.
The common causes for incorrect or missing Social Security numbers on IRS returns include typographical errors and invalid SSNs due to marriage resulting in new last name.
Loss of time
Completing IRS documentation can be an overwhelming and time-consuming task for payroll. These teams have a large amount of information to go through. If they didn’t properly verify data at the beginning of a person’s employment, they could find themselves in an even more stressful situation. It could take businesses additional minutes, hours, days and potentially months to rectify the errors and send back completed and corrected forms, especially if transferred by mail instead of electronically. Companies and their payroll teams will lose valuable time they could spend on more important responsibilities if SSNs are reported missing or incorrect.
Next steps for payroll teams
Although no organization wants to deal with the aftermath and additional steps that come with an incorrect or missing SSN on an IRS claim, it does happen. If companies complete this process electronically, they will often receive word of the mistake quickly – if not immediately. If sent by mail, it could take the rejection a little longer to reach payroll teams. Once organizations realize this error, there are certain steps they can take, according to the Houston Chronicle:
- Utilize the Social Security Administration’s Social Security Number Verification Service to ensure employee credentials are accurate.
- Ask the employee to verify the SSN to rule out typographical mistakes or otherwise.
- Document all actions related to obtaining correct SSN information for at least three years.
- Submit form W-2c – The Corrected Wage and Tax Statement – to the Social Security Administration. This data will replace the original information supplied by companies and their payroll teams.
- Keep a copy of employee SS cards on file, if possible.
It’s crucial for businesses and their payroll teams to verify their employees’ SSNs before completing and filing year-end returns. Employers should verify this information as soon as a person is hired to avoid problems in the future. Failing to do so could result in loss of valuable time, rejected IRS submissions and costly penalties. Taking simple steps, including authenticating SSNs with the Social Security Administration’s online service, can ensure companies submit their documentation in a timely manner and with correct data.
Have more questions relating to your company’s payroll processes. Talk with an expert at PTM today for assistance!