I. INTRODUCTION
Quite often, employers and third-party submitters (e.g., accountants, service bureaus, etc.) may want to verify an employee’s Social Security number (SSN) and are able to do so by accessing the Social Security Administration’s (SSA) Employee Verification Service (EVS). This service matches the employer’s record of current or former employee names and Social Security numbers with SSAs records. The EVS may be used prior to preparing and submitting Forms W-2 (Wage and Tax Statements) to the SSA. Accurate name/SSN information on the W-2 benefits both the employee and the SSA so that an employees’ earnings record is properly credited for determining future social security benefits.
In addition, bankers have also asked what verification alternatives they might be able to use in order to verify the SSNs (i.e., Taxpayer Identification Numbers or TINs) of account holders, particularly in light of the customer identification program rules, Bank Secrecy Act requirements and SAR filing information.
The purpose of this article is to address these two issues.
II. EMPLOYEE VERIFICATION SERVICE (EVS) REQUESTS AND PROCEDURES
The SSA will verify SSNs solely to ensure that employee records are correct for the purpose of an employer completing Internal Revenue Service Forms W-2 (Wage and Tax Statement). Any information that an employer receives from records maintained by the Social Security Administration is governed by 5 USC 552a(I) of the Federal Privacy Act. Under this Act, anyone who obtains this information under false pretenses, or uses it for a purpose other than that for which it was requested, may be punished by a fine or imprisonment or both.
EVS requests may be submitted at any time and will generally take about 30 days to process. There are several options for verifying employee Social Security numbers to choose from, based on the number of employee names/SSNs that need to be verified. All verification methods are free.
Social Security Office
2630 Eastside Blvd.
Beatrice, NE 68310
Room 240
100 Centennial Mall North
Lincoln, NE 68508
300 East Third Street
P.O. Box 1127
North Platte, NE 69103
415 Valley View Drive
Scottsbluff, NE 69361
115 N. Webb Rd.
P.O. Box 2138
Grand Island, NE 68801
Suite A, First Floor
208 North Fifth Street
Norfolk, NE 68701
604 N. 109th Court
Omaha, NE 68102
Note that the SSA will advise you if a name / SSN submitted does not match its records. A non-match does not imply that you or your employee intentionally provided incorrect information about the employee’s name or SSN. In fact, the SSA advises employers of the following “Legal Policy” under the subheading of “Don’t Discriminate or Misuse EVS”:
It is not a basis, in and of itself, for you to take any adverse action against the employee, such as laying off, suspending, firing, or discriminating against an individual who appears on the list. EVS should only be used to verify currently or previously employed workers. Company policy concerning the use of EVS should be applied consistently to all workers, e.g. if used for newly hired employees, verify all newly hired employees; if used to verify your data base, verify the entire data base. Any employer that uses the information the Social Security Administration provides regarding name/Social Security Number verification to justify taking adverse action against an employee may violate state or federal law and be subject to legal consequences. Moreover, this makes no statement about your employee’s immigration status.
III. CUSTOMER/ACCOUNT HOLDER VERIFICATION ALTERNATIVES
Although it is relatively easy for a person to verify his or her own SSN, it is almost impossible for a third party to so for the purposes of a TIN verification. When an applicant or customer submits a SSN, you may determine where the person lived when the number was applied for and the year in which it was issued by accessing publicly available information. A third party commercial service provider may have the ability to provide some additional information, e.g., whether the person had given one of the third party’s other clients the same number. In any case, the third party can not verify that the SSN given to you is really that of the applicant or customer. A person could be required to verify the accuracy of his or her SSN by filing Form SSA-7028 with the SSA and receive a written response.
If a business presents the bank with an EIN, you can determine in what state the entity was located at the time of issuance based on the two digit prefix, however you can not verify that the number belongs to that entity. The business could be required to verify the accuracy of an EIN by filing Form 147C with the Internal Revenue Service or, according to Form SS-4 Instructions, telephone l – (800) 829-1040.
There is also a “High number list” on the Social Security Number Website that produces the highest numbers issued in each group. This could be printed and distributed from time-to-time, in order to be updated, to appropriate new accounts personnel for initial verification purposes.
The SSA office has a telephone number (1-(800)-772-1213) that the applicant or customer can call in your presence to verify the validity of the offered SSN. Identifying questions are asked to verify the number and person. If a mistake appears, the number holder will be instructed to go to the closest Social Security Office. If all information is correct and the person needs proof of validity, the local Social Security Office is able to print out the information to prove the number belongs to that person.
If you perform a search on an internet-based search engine (key words “Social Security number verification”), numerous web sites are produced that promise to provide information for a fee. There are a number of commercial service providers that may, for a fee provide a match of number and name if such is located in their respective databases. In some cases, you may be able to key in an SSN and the service reports the name and most recent address in the database associated with that number, date of birth and last employment. These services do not however, guarantee that the name and number combination is valid or that the person presenting that combination has not stolen the identity. Another SSN verification tool only allows you to look up 10 SSN’s per day and it is single look up only. Also, this tool does not appear to check whether the person’s date of birth is consistent with the date of issuance.
Several commercial services do provide a check against the Social Security Master Death Index. Identity thieves are known to steal the identities of recently deceased individuals, since their credit histories will be current. Checking the master death index allows one to determine whether or not the SSN belongs to someone who is deceased.
One company offers a desktop software tool that verifies: whether the SSN is a valid number; whether the SSN was issued by SSA; if the SSN was issued in a time period consistent with the person’s stated date of birth; the state where the SSN was issued (the first SSNs informs one of the state that the SSN was issued and a great majority of persons are able to inform you as to where they obtained their SSN; and whether the SSN is an expired number that belongs to a deceased person (i.e., possibly stolen SSN). The software also generates an audit log and report for proof of compliance with § 326 of the USA PATRIOT Act and is available for a fixed license fee (i.e., no fee per record).
IV. INVALID CUSTOMER/ACCOUNT HOLDER NUMBER ISSUES
If a bank encounters a situation that indicates that the SSN or EIN given has never been issued, are there any reporting obligations? Such situations do not constitute identity theft since the person is not impersonating anyone, but is creating a new person and new identity. There are also situations when a commercial service or credit bureaus inform the bank that the SSN or EIN belongs to another person or the SSN belongs to a deceased person. In these cases, identity theft may be in play, there may be inaccuracies with the reporting services or there may be a case of applicant mistake or misrepresentation. Must the bank report these types of activities?
The USA PATRIOT Act provides that the bank cannot open an account for such a person without valid identification, but there appears to be a “gray area” as to whether the bank should file a SAR. Some commentators have taken the position that such situations do not require SAR filings at all. Others have maintained that there is no requirement to file a SAR unless the SSN or EIN is being used in an attempt to defraud the bank and meeting the dollar thresholds set forth by SAR regulations. Still others have taken the position that any attempt to open a bank account with false identification documents or false or stolen SSN or EIN numbers is an attempt to defraud the bank and therefore a SAR should be filed.
Rather than opening the account or dismissing the application, some bankers will attempt to determine whether there is an error that needs to be determined and corrected by asking the applicant to call the Social Security Office in the case of SSNs or call the IRS in the case of EINs in their presence to validate the card and number. Alternatively, the bank may require that the applicant arrange with the local Social Security Office to obtain a printout indicating that the SSN is valid or arrange with the IRS verification that the EIN is valid.
V. CONCLUSION
The Treasury Department and the SSA announced on July 17, 2002 (PO-3264), an agreement to develop and implement a system by which financial institutions may access a database to verify the authenticity of SSNs provided by customers at account opening. At this time, it appears that the details of the system are still being worked out. The agencies plan to develop a system where checks could be done through online access after the customer has consented to such a check. Since verifying the authenticity of a SSN does not ensure that the person who provided the information is in fact that person, the agencies have stated that guidelines would be set to determine what proof of identification would be required by financial institutions. Until this authenticity verification system is in place, the discussion in Paragraph III of this article appear to be the only alternatives that financial institutions may use for SSN account opening verification purposes.