In March of 2019, the Social Security Administration (“SSA”) began mailing Educational Correspondence (“EDCOR”) also known as Employer Correction Request Notices (“ECR”), and formerly known as the “No-Match Letters,” to employers who filed W-2 forms for 2018 which contained at least one mismatched name and social security number. Employers should not ignore these notices. Employers must ensure they are complying with their obligations to resolve these errors. Failure to comply with the obligations could result in an I-9 audit by the U.S. Immigration, Customs and Enforcement Agency (“ICE”) and/or penalties from the Internal Revenue Service (“IRS”).
Employers have 60 days from receipt of the notice to provide the SSA corrected information, if any. Previously the SSA sent No-Match Letters for each individual with mismatched information, today the SSA sends one notice containing only the total number of employees whose records did not match. Employers must take additional steps to uncover which employees have mismatched information.
What should employers do after receiving EDCOR or ECR?
Follow these steps to be in compliance with your obligations:
1) Register with Business Services Online (“BSO”) located at: https://www.ssa.gov/bso/bsowelcome.htm. Select “Register” and create a new account.
2) Select SSA services for employers.
a. Add your employer information, including your EIN number. Answer “yes” to the questions: “Do you want to report wages or test wage files using AccuWage?” and “Do you want to view Wage Report Name/SSN Errors?” These services will allow you to view information about your W-2 report online. Select “Next” to continue.
b. To access your W-2 reports you will have to answer yes to the following question: “Do you want to verify SSNs online?” Using the Social Security Number Verification System (SSNVS) is not mandatory and should not be done without understanding the legal implications of using that system. Nevertheless, you must select “yes” to be able to review the W-2 report.
3) Within 10 days, SSA will mail a notice with the Activation Codes. You will also receive an activation code for SSNVS, but you are not required to use it. We recommend that you speak to an attorney before activating SSNVS.
4) Log into your account and enter the activation code. Select “Report Wages to Social Security”  “View Employer Report Status”  “Report Details”  “Error Details.” The following page will show the names of the employees with mismatched information.
5) Review the Employee Mismatch Information.
a. Confirm that the information you entered on the W-2 corresponds to the information provided by the employee. If you made an error in your reporting provide the SSA with corrected information.
b. If the information matches, inform the employee that SSA has found that his name and social do not match SSA Records and provide him with the information that is on the BSO portal.
c. Ask the employee to verify the information with his social security card, and if the information does not match provide SSA with corrected information.
d. If the information matches, ask the employee to go to any local SSA office to resolve any potential issues, and provide the employer with any changes.
i. You can obtain a sample letter of the notice to provide to employees at:
https://www.ssa.gov/employer/sampleltr.doc
6) If the employee produces new or different information, submit a form W-2C which can be found on the BSO portal under “Forms W-2C/3C” in the Electronic Wage Reporting home page.
a. Select “Start a New Correction Report” and answer the questions. Next, select the kind of payer (in most cases it will be 941 (regular), but be cautious as you cannot change this selection later).
b. Make the corrections as necessary and consider verifying the information with the employee to ensure accuracy. If everything is correct follow the steps online to submit electronically.
Avoiding Potential IRS Fines
Section 6721 of the Internal Revenue Code imposes fines on employers who misreport and fail to correct information submitted to the IRS on information reports (including W2s and 1099s). If you receive an SSA EDCOR notice, there may also be incorrect information on the information reports submitted to the IRS.
Fines for errors on information reports that are not timely corrected range between $50 – $270 per record, which can get very expensive for employers with numerous employee mismatches. However, there is an exception that allows the IRS to forgo any fines if the employer acted reasonably and took steps to avoid the mistakes. To avoid potential fines by the IRS consult an attorney to determine what you can do to avoid IRS penalties.
Avoiding Constructive Knowledge
An employer who has “constructive knowledge” that an employee does not have a valid work authorization is liable for penalties for continuing to employ that person. In 2006, the federal government sought to include mere “receipt” of an SSA no-match letter as sufficient to demonstrate “constructive knowledge.” While the regulation was blocked by the courts, we do not yet know whether receipt of an EDCOR or ECR letter might be deemed sufficient to demonstrate “constructive knowledge.” We urge all employers in receipt of an EDCOR letter to take all reasonable steps to correct employee records and recommend an I-9 Audit for those employers who have not recently, or ever, completed an I-9 audit.
Bottom Line
While employers have no obligation to provide any information to the SSA, employers should be aware of the potential immigration implications associated with these notices. DHS continues to ask employers to provide copies of No-Match letters during DHS I-9 audits. You should ensure that you are complying with the I-9 regulations.
Whether DHS will assume that the employer has “constructive knowledge” of unauthorized workers based on these new notices remains to be seen. But don’t wait until it’s too late to properly resolve the errors after receiving a notice.
Please contact Monty & Ramirez LLP with any questions regarding EDCOR or ECR notices, if you seek assistance with an I-9 audit, or if you need assistance registering with BSO to view the wage report/SSA errors.
Jacob M. Monty, Monty & Ramirez LLP
Jacob M. Monty—the managing partner of Monty & Ramirez LLP and editor of Texas Employment Law Letter—practices at the intersection of immigration and labor law. He can be reached at jmonty@montyramirezlaw.com or 281-493-5529.