Can I Hire an Employee Without a Social Security Number?
In order to hire an applicant for employment in the United States, employers must verify the applicant is eligible for hire. Most employers request the new hire’s Social Security Number(SSN)to satisfy this requirement. This number contains nine digits and is issued by the U.S. government to all U.S. citizens and to eligible residents who apply for a social security card. The employer then uses this number to report each employee’s annual wages to the Internal Revenue Service (IRS) and to the Social Security Administration (SSA). Employers also use employee social security numbers to file state and local business taxes. A social security number is the most widely accepted identifying number that is associated with a person’s taxes. However, an employer may occasionally encounter a new hire who does not have a social security number. New hires and employers should not panic because an SSN is just one form of identification needed to verify work eligibility. Employers are also authorized to use a temporary employer Taxpayer Identification Number (TIN) for any new hire who does not possess a valid social security card. Employers should be careful not to confuse an Individual Taxpayer Identification Number (ITIN) with a standard taxpayer identification number.
Applying for a Social Security Card
The Internal Revenue Service requires any person working in the U.S. to provide a valid identification number for income tax reporting purposes. If an employer chooses to hire an applicant who does not have a social security card, that employee has seven days to produce a valid social security card. If the employee discloses the card has been lost or stolen or that he or she has never been issued a social security card, the new employee must fill out an application to receive one. This document is called an SS-5 form and can be requested from the Social Security Administration or downloaded from its website. Employers have the option of assigning the new employee a temporary TIN until the social security card arrives.
What is a Temporary Taxpayer Identification Number(TIN)?
Individuals eligible for work in the United States also qualify to receive social security benefits when they retire. The Social Security Administration is strict about enforcing payment laws, so it will only process payroll for an employee waiting for a SSN for no more than seven days. Many times, an employer will opt to assign this employee a government approved temporary taxpayer identification number. A temporary tax identification number is similar to a social security number in that it contains nine digits. The difference in the numbers is the way they are formatted. A social security number appears as two sets of three numbers followed by a set of four numbers(XXX-XXX-XXXX); a tax identification number appears as a set of two numbers followed by a set of seven numbers(XX-XXXXXXX).
Temporary TINs can only be used to pay new hires through payroll systems that connect with a systems operations program (SAP). This allows the payroll department or company accountant to effectively input information about employees waiting for valid employment identification numbers into existing payroll systems, as well as integrate that information with external employee tracking systems. Temporary TINs must be monitored and replaced as soon as a valid social security number or tax identification number is received. Employers should not try to use an individual tax identification number (ITIN) in place of a valid TIN or SSN.
Individual Tax Identification Number(ITIN)
In the United States, potential employees are classified as resident aliens or non-resident aliens. A non-resident alien classification is assigned to foreign nationals who have not passed their green card test. A non-resident alien will not be approved for a social security number or a tax identification number. Individuals who have not been approved for a SSN or TIN and who still plan to reside in the United States must apply for an Individual Taxpayer Identification Number (ITIN) from the IRS. This identifier contains nine numbers and is formatted like an SSN, but it begins with the number “9.” While the ITIN does not satisfy the requirements for employment verification or tax filing purposes, an ITIN can be used by the spouse of a non-resident alien on the spouse’s tax return application.
Employers and new hires must be careful not to confuse a temporary tax identification number or a valid tax identification number with an ITIN. Employers cannot accept an ITIN as a valid employee identification for work eligibility. The IRS will penalize companies and resident and non-resident aliens who use ITINs for U.S. employment verification purposes. Anyone assigned an ITIN who becomes eligible to work in the U.S. must apply for a social security card. It is legal to hire someone who does not have a social security number. However, the employer must have the employee complete an affidavit or IRS approved document for failure to obtain a valid tax identification number.