What You Should Know About The IRS, SSN & ITIN
In an effort to increase security and to properly identify individuals as authorized to reside and work in the U.S., there have been numerous changes, enhancements and additions to the issuance of visas and to port of entry procedures. Not surprisingly there has also been a change in the way the Social Security Administration processes and issues Social Security Numbers (SSN). What was once available to the majority of people legally and physically present in the U.S. with minimal documentation, is now an elusive and much coveted item that seemingly requires giving up your soul to the Social Security Administration (SSA). A little dramatic perhaps, but talking to the dependents of foreign nationals who are in the U.S. in valid status, not even their souls will get them the much coveted SSN.
In addition to limiting the pool of qualified applicants, the SSA has also added verification procedures prior to issuing a SSN to qualified applicants. In light of these new verification methods, for foreign nationals who have recently obtained employment authorization, it may take up to two months or longer for such individuals to obtain a SSN. This extensive delay in processing is caused by SSA's cross-reference and verification with the U.S. Citizenship and Immigration Services (USCIS), formerly the Immigration and Naturalization Service. Due to the fact that the issuance of the SSN is dependent on USCIS' confirmation of employment authorization, whether or not USCIS has updated their database and how quickly they respond to the SSA inquiry often leads to these delays. Any errors in USCIS' data entry, wrong date of birth or country of birth for instance, will likely lead to even further delays.
However, it is important to note that the delay should not prevent a U.S. company from placing the foreign national on payroll. The USCIS, and not the SSA, verifies and authorizes employment in the U.S. The foreign national's I-94 card depicting the status and validity dates is the document verifying the individual's status in the U.S. and corresponding employment authorization. Therefore, the foreign national may begin employment upon receipt of a valid I-94 card irrespective of the status of their application for a SSN. Furthermore, for employees who enter the U.S. in H-1B status, employers and attorneys must be cognizant of the implications and wage liabilities for delays in placing the foreign national on the company payroll, lack of a social security number will not waive an employer's wage obligations.
Pursuant to Internal Revenue Service (IRS) regulations, if an employee does not have a social security number, to initiate employment, the employee has the option of providing documentation verifying that the SSN has been requested. Specifically, the relevant section states:
If the employee does not have an account number card but has available a receipt issued to him by an office of the Social Security Administration acknowledging that an application for an account number has been received, the employee shall show such receipt to the employer. 26 C.F.R. §31.6011(b)-2(b)(iii)When such receipt acknowledgement is provided:
[T]he employer shall enter in his records with respect to such employee the name and address of the employee exactly as shown on the receipt, the expiration date of the receipt, and the address of the issuing office. The receipt shall be retained by the employee. 26 C.F.R. §31.6011(b)-2(c)(2)(iii)If the SSN is not available at the time the company is filing its return and reporting wages paid to such employee pursuant to regulations,
the employer shall enter on the return, with the entry with respect to the employee, the name and address of the employee exactly as shown on the receipt, the expiration date of the receipt, and the address of the issuing office. 26 C.F.R. §31.6011(b)-2(c)(3)(1).As a practical matter, an employer may want to discuss the available options with its payroll administrator. Generally, there are two options available: (1) provide the employee with a "dummy" number and enter the employee in the payroll system while applying the appropriate withholdings; or (2) estimate withholding amounts and pay the employee's net salary. Once the SSN is obtained the withholding can then be applied to the employee's account and the company will the need to amend its returns. A word of caution, dummy numbers may also create red flags and could eventually become a basis for an Immigration and Customs Enforcement Audit (ICE) if the IRS shares this information with the immigration services.
What about the ITIN some may be asking, is it the answer to our dilemma? For those without work authorization who have in the past tried to obtain an alternative identifier to the SSN by applying with the IRS for an Individual Taxpayer Identification Number (ITIN), that option is also disappearing. The IRS issues ITINs only to individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain a Social Security Number (SSN) from the Social Security Administration (SSA). ITINs are issued regardless of immigration status because both resident and nonresident aliens may have U.S. tax return and payment responsibilities pursuant to the Internal Revenue Code. Individuals must have a filing requirement and file a valid federal income tax return to receive an ITIN, unless they meet an exception (just as limited and elusive as the SSA exceptions of course).
Concerns over restrictions to obtaining a SSN are fundamental. Many of our record keeping systems have been developed with the assumption that a SSN will be available as the primary identifier. As the SSA continues to revise its regulations in an effort to reduce fraud and misuse of social security cards and numbers, it is becoming more and more difficult for foreign nationals temporarily residing in the U.S. and who are in legal status to function and lead "normal" lives. What once was a simple task of obtaining a driver's license, opening a bank account or adding a spouse to life insurance or health insurance plans is slowly becoming more difficult than obtaining authorization to enter the U.S. in the first place. Hopefully, our record keeping systems in industries affecting the day to day lives of individuals living and working in the U.S. will be able to adjust quickly enough to allow for efficient and smooth transitions to the implementation of a new "identifier" that is not linked to the now infamous SSN. Until then foreign nationals and those representing them will continue struggling as they search for answers, options and alternatives.
Mahsa Aliaskari, Esq. is an associate in Greenberg Traurig's Business Immigration Group and is based in GT's Los Angeles office. Her practice focuses on assisting companies, professionals and skilled workers in obtaining immigrant and nonimmigrant visas. Ms. Aliaskari has represented clients in DOL initiated audits and assisted multi-national companies in performing internal audits and creating training programs. She may be contacted at aliaskarim@GTLAW.com.
The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.