If information on your employee’s W-2 doesn’t match the information in the Social Security Administration’s database, you may get a no-match letter.
As an employer, you’re required to file a Form W-2 annually for each employee to whom you paid wages and withheld taxes for. Generally, the form must be filed with the Social Security Administration by January 31.
The SSA verifies the Social Security and Medicare calculations you report on each Form W-2. The agency uses these calculations to determine the employee’s eligibility for future Social Security and Medicare benefits. Additionally, the SSA matches each employee’s name and Social Security Number (SSN) on the Form W-2 against the information in their database. If the information does not match, the SSA may send you a no-match letter.
What are SSA no-match letters?
An SSA no-match letter means that there’s a discrepancy between an employee’s name and SSN and what’s reflected in the SSA’s database.
Also called an “employer correction request notice,” an SSA no-match letter means that there’s a discrepancy between an employee’s name and SSN and what’s reflected in the SSA’s database. The letter is basically an alert, urging the employer to correct the problem. If they don’t, the employee might not receive the benefits they are entitled to.
How long have SSA no-match letters been around?
The short answer is decades.
In 1993, the SSA began sending no-match letters to employees and employers, to notify them of inconsistencies between their Form W-2 and the SSA’s records. However, the SSA halted this practice in 2012, due to complaints and lawsuits from immigration advocates, business groups, labor unions, and employers. A major complaint was that no-match letters could trigger issues related to undocumented workers and discrimination.
It’s important to note that an SSA no-match letter by itself does not mean an employee is an undocumented worker. It means that there’s at least 1 employee-data mismatch that needs correcting, so that the SSA can properly post the information to its database. Nonetheless, experts say that no-match letters can open up a range of complicated Form I-9 issues, which may not be easy to resolve.
After stopping the no-match letter program in 2012, the SSA resumed the practice in March 2019. According to JDSupra.com, “As of June 2019, the SSA has mailed over 570,000 [no-match] letters to employers who filed their 2018 Form W-2 electronically.” Further, the SSA planned to send no-match letters to employers who filed their 2018 Form W-2s by paper.
During the early months of the COVID-19 crisis, the SSA paused sending no-match letters. But as stated by the law firm Littler, “It appears that towards the end of 2020, however, the SSA has resumed this practice.”
What causes the SSA to send no-match letters?
Common reasons include:
- A clerical or typographical error, such as due to inaccurate information stated on the employee’s Form W-4 or Form W-2
- The employee’s name has changed (e.g., because of marriage or divorce), but the employee failed to report the name change to their employer
- Incorrect or incomplete employer records
What does the no-match letter say?
The letter contains the following:
- An explanation of why the employer received the notice. The letter does not list the names or SSNs of affected employees. It simply states the number of employee names and SSNs the employer reported on Form W-2 (plus the tax year) that do not match the SSA’s records.
- An “Important” note that says, “This letter does not imply that you or your employee intentionally gave the government wrong information about the employee’s name or SSN. This letter does not address your employee’s work authorization or immigration status. You should not use this letter to take any adverse action against an employee, such as laying off, suspending, firing, or discriminating against that individual, just because his or her SSN or name does not match our records. Any of those actions could, in fact, violate State or Federal law and subject you to legal consequences.”
- What employers should do if they receive a no-match letter from the SSA.
How should you respond to a no-match letter?
- Do not ignore the letter, and do not make any assumptions about why you’re receiving the notice. For example, do not assume that the letter means an employee is an undocumented worker or that your payroll staff made a mistake.
- Use the SSA’s Business Services Online (BSO) to view the names and SSNs that do not match the SSA’s records. You must register to access BSO. To register, follow the link provided in the no-match letter.
- Compare the information you receive from BSO with what you submitted on the employee’s Form W-2.
- Make the necessary corrections on Form W-2c, Corrected Wage and Tax Statement.
- File the W-2c with the SSA no later than 60 days of receiving the no-match letter.
- Contact the SSA at the phone number provided in the no-match letter, if you have questions about the notice.
Steps for communicating with employees about a no-match letter
- Inform the employee of the notice and ask them to verify the name and SSN you have on file for them, if the no-match letter does not stem from an error on your part.
- Advise the employee to contact their local SSA office to rectify the issue, if applicable.
- Give the employee a reasonable period of time to resolve the matter. The National Immigration Law Center says, “Reasonable amount of time is not defined by statute or regulation in the SSA no-match context, but 120 days is likely a reasonable amount of time.”
- Document all communications between you and the employee regarding the no-match letter, including any information the employee gives you regarding their interactions with the SSA.
Best practices for avoiding or handling SSA no-match letters
Verify employees’ names and SSNs before filing W-2s
Consider using the SSA’s free Social Security Number Verification Service (SSNVS) that lets you verify employees’ names and SSNs before filing Form W-2s. According to the SSA, the SSNVS produces immediate results and “can significantly reduce errors through BSO.”
Consider using the SSA’s free Social Security Number Verification Service (SSNVS) that lets you verify employees’ names and SSNs before filing Form W-2s.
Fix identified issues promptly
If you discover an employee name or SSN error, do not wait for the SSA to send you a no-match letter. Correct the issue right away — such as by updating your payroll system, and if applicable, filing a corrected W-2 with the SSA.
Seek legal counsel when appropriate
You may need to take adverse employment action if the employee fails to submit a valid SSN by the reasonable timeframe allotted, or if you receive credible information that they are not authorized to work in the United States. In these cases, you may want to consult with a qualified attorney, who can advise you on what actions you should or should not take plus any risks or liabilities associated with those actions.
Demonstrate good faith by responding to the letter
The SSA does not enforce immigration laws nor can it penalize employers for not responding to a no-match letter. However, the Department of Homeland Security’s Immigration and Customs Enforcement (ICE) agency can request no-match letters from the SSA for certain procedures, such as during an I-9 audit. Note that the SSA is legally allowed to share that information with ICE.
Employers may be able to demonstrate (to ICE auditors) that they acted in good faith by responding to the SSA no-match letter.
Perform internal audits
To reduce the likelihood of receiving an SSA no-match letter, conduct periodic internal audits of your employment forms and related administrative processes — including for I-9, W-4, and W-2 forms. Internal audits can help you uncover discrepancies and expeditiously fix them.