Is the private security guard watching over your home or office an illegal alien? If so, is the government doing enough to fix the problem?
These questions must be asked because the inspector general of the Social Security Administration has discovered that a California-based security guard company employed 4,321 people in 2001 whom the company did not correctly identify on W-2 forms, often an indicator that a worker is an illegal alien.
The IG's office, however, believes current law prevents it from identifying this company not only to the public but also to the Department of Homeland Security and the State of California.
After the company in question filed 8,902 W-2 reports for 2001, SSA could not match 4,321 to known taxpayers. These were consigned to what SSA calls the Earnings Suspense File (ESF).
The IG mentioned the company in an October report analyzing (but not naming) the 100 companies that filed the most unmatchable W-2s from 1997 to 2001. The security-guard company was not specifically cited as one of the Top 100, but was mentioned in a section discussing the auditors' analysis of employers who filed at least 200 bad W-2s in 2001.
"Another service industry employer, a security guard service in California," said the report, "had almost 49 percent of its reported wage items posted to the ESF in TY (tax year) 2001. This employer reported 8,902 wage items, of which 4,321 did not match SSA's records and were posted to SSA's ESF. As a result, this employer posted more than $27 million in wages to the ESF."
I posed written questions to the IG's office about this passage and received written answers.
Question: What is the name of the security guard company? Or, if you believe federal law prevents you from releasing the name, could you please cite the specific applicable statute.
Answer: "The name of the California security guard company is protected under Section 6103 of the Internal Revenue Code, 'Confidentiality and Disclosure of Returns and Return Information' (Title 26 U.S.C. § 6103). As such, this tax information cannot be disclosed by SSA."
Question: Has the SSA IG notified any agency of the California government about this security guard company's problem with filing bad W-2s?
Answer: "With the exception of an ongoing criminal investigation, the same disclosure restrictions under Section 6103 of the Internal Revenue Code apply to sharing this information with outside parties, such as the State of California. To that end, our audit reports are intended to highlight trend analysis in the Earnings Suspense File so that agency management may take appropriate follow-up action."