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 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 bits 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 staff to take the time to solve out the problem. So the smartest move is to ensure that the information matches from the outset.
Among the most common mistakes, according to the SSA, are transcription errors and typos, incomplete or blank names or numbers, and name changes that go unreported. To help prevent these errors, take the following steps:
- When anyone at your company takes an employee’s name and SSN, have that person repeat the information and the spelling to the employee to ensure everything is correct.
- Have employees verify the information again once it is entered into your company’s payroll records.
- When W-2 forms are issued, have the employees double check the information one more time. If there is an error, there is still time to issue a corrected W-2 before you mail copies to the SSA.
- When employees marry 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 based on the number of names you need to confirm:
Five Names – To verify the information on as many as five employees, you can telephone the SSA. Have the following information at hand when you call:
- Your 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.
- Employee’s gender.
Fifty Names – To verify the information on as many as 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. The EVS 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 as many as 10 employees immediately or as many as 250,000 employees within one federal government business day by using the agency’s Social Security Number Verification Service (SSNVS).
The online service can be used only after individuals become employees. (See here for more information on using the online tool.)
Suppose after you’ve already mailed W-2s to your employees and sent the top copies and the W-3 to the SSA, you discover an error. Now what?
First, you’ll need to correct the information on Form W-2c and provide the employee with copies 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 will 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 will be provided on the W-3c.
Forms W-2c and W-3c should be available at your local IRS office, or you can order them by calling 1-800-TAX-FORM.
For more detailed information about fixing errors or if you need to correct 250 or more forms, contact your accountant or payroll professional.