If President Obama cares to read the report, I would point him especially to page 7. "Our review found that about 1,650 employers with over 500 name/SSN no-matches had reported about 2.6 million no-matches to SSA," it says. "They received EDCOR letters that included 907,000 of the no-matches. Consequently, they were not informed of about 1.7 million no-matches. These employers had reported no-matches that ranged from 501 to 37,375, and about 44 percent of the employers had reported SSA (sic) 1,000 or more no-matches to SSA."
If recent history is a guide, it is not unprecedented for an employer to file tens of thousands of no-match W-2s in a single year. In October 2004, the SSA inspector general filed an audit report analyzing the 100 employers that had filed the largest number of bad W-2s in the five years from 1997-2001. The inspector general did not name these "Top 100" bad W-2 filers but did cite the states in which they were located.
America's No. 1 filer of bad W-2s was an Illinois-based company that filed 131,991 no-match W-2s from 1997-2001, for an average of 26,398 per year. The No. 2 filer of bad W-2s was a Texas-based company that filed 108,302 no-match W-2s from 1997-2001, for an average of 21,600 per year.
The Illinois employer, according to the inspector general, paid $5.4 billion in wages to employees whose Social Security numbers did not match their names.
The employer could have been paying that money to Americans and permanent legal residents entitled to work in the U.S. who have valid Social Security numbers and are quite happy to give them to their employers.
SSA will not give the Department of Homeland Security (DHS) the names of the employers who file massive numbers of no-match W-2s because they say that is protected tax information under Section 6103 of the Internal Revenue Code. Under the George W. Bush administration, DHS promulgated a regulation that instructed employers in how they could find "safe harbor" from having SSA's no-match letters used against them as evidence that they had knowingly hired illegal aliens. But a federal court in California suspended this regulation in 2008, and Secretary Napolitano rescinded it last year.
Rep. Steve King, the Iowa Republican, has introduced the New IDEA Act (HR 3580) that would make two key changes in federal tax law: It would prevent businesses from deducting from their taxable income the wages and benefits they pay illegal aliens, and it would make the IRS share information with DHS for enforcing immigration laws.
President Obama called on Congress last week to give amnesty to illegal aliens, which also means giving amnesty to businesses that routinely hire illegal aliens and file no-match W-2s with the federal government.
Congress should pass Steve King's bill instead.
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