Penalty for Not Reporting An Employee’s SSN

When an individual initially becomes an employee, it’s the employer’s responsibility to request the employee for their social security number. This can either be by itself or through a completed W-4 form that each employee is required to complete for employment.

The employer can assume that the social security number is correct and still be able to waive the penalty later for using an incorrect number. You must keep a record of the initial W-4 to verify later that you acted in good faith when reporting your employee’s social security number.

Waiving the SSN Penalty When You Didn’t Receive It

If the IRS sends you a notice that you have failed to include an employee’s social security number on their W-2, it is still possible to waive the penalty. As long as you have kept good records throughout the year and are able to prove that you tried at least two times to get the employees social security number the IRS will waive the penalty.

Understand that asking your employee two times must be inside your businesses calendar year. If your calendar year begins on January 1st and ends on December 31st it must be within this time period.

Waiving the SSN Penalty When the Number Is Incorrect

If the IRS contacts you about a social security number you submitted for one of your employees because the number is incorrect, you can waive the penalty if you can prove that you initially were given the wrong number. This can only be accomplished if you have kept excellent records throughout the year and are able to provide documentation to the IRS.

The employee social security number penalty is a very straight forward penalty but can only be resolved if you have good record keeping skills. The IRS wants documentation for everything and this is no exception to that rule. Remember to keep a copy of your employees W-4 and you should have no problem later if an issue arises.

About Paul Gaulkin CPA

Paul Gaulkin is a Certified Public Accountant and enrolled with the U.S. Treasury to practice before the IRS. Mr. Gaulkin possesses unique technical knowledge in the process of securing relief for taxpayers nationwide with IRS and State tax problems. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.


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