Failure to Do so Could Lead to Penalties From the Internal Revenue Service

COLUMBIA, Md., Nov. 29 -- Many companies are still having problems with Social Security compliance issues and failure to do so could lead to penalties from the Internal Revenue Service, according to Fiducial, a multidisciplinary professional services provider to small businesses with offices nationwide.

The IRS and Social Security Administration (SSA) process about 240 million W-2s each year and about 10% of them have names and Social Security numbers that don't match. As a result, employees' earnings are not able to be credited to their Social Security accounts.

"Verifying Social Security numbers should be something that happens every time employees are hired," said Kelly Leese, assistant director of Fiducial's Payroll Processing Center (PPC). "If the W-2 doesn't contain the correct name and Social Security number, the business may be penalized up to $50 per employee for each incorrect W-2. This could be a hefty penalty for companies with a large payroll."

As part of its services, the PPC can verify the employer's entire database so from that point forward a company's verification process will be in place for every new employee hired which will ensure the accuracy of the database. New clients who sign on by January 31, 2006 can have their employees verified for free along with receiving a $100 discount off services.

Penalties can be abated, Leese says, if the employer demonstrates that they acted in a responsible manner and took steps to avoid the mismatch. The easiest way to do this is to have a policy in place to verify the Social Security number for all employees. Once the policy is in place, the company needs to take steps to make certain that the information is correct.

Leese outlined the following five steps that employers can take to ensure they are in Social Security Number compliance:

1. Ask each new worker for proof of his/her Social Security Number (SSN) by showing you a Social Security card. You should maintain a copy of the W-4 the employee provides and document any subsequent requests for a new W-4 form you make in the event that you receive a notification from the SSA or IRS that there is a problem with the W-4.
   
   
2. Maintain accurate records of the SSN and the name provided by the employee in all payroll records.
   
   
3. Remind workers to report any name changes due to marriage or divorce to SSA first and then the employer.
   
   
4. Validate the SSN on the W-4 with a SSN validation service.
   
   
5. Remind employees to verify the accuracy of their name and SSN when they receive their W-2 and report any inaccuracies to the payroll department.

"If you take these proactive steps," Leese said, "they will help eliminate any potential penalties from SSA or IRS in reference to SSN compliance."

For more information, contact Ms. Leese toll free at 1 (866) 2-FIDUCIAL (1 886 234-3824) or visit http://www.fiducial.com/payroll.

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