4nannytaxes.com - Updates From The Nanny Tax Experts

Identity Theft: An Issue for Household Employers

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According to a report released by the National Taxpayer Advocate Nina E. Olson, the number of tax returns the Internal Revenue Service decided needed additional screening for possible fraud and/or identity theft in 2011 exceeded 1 million, a 72 percent increase over 2010. The office of Taxpayer Advocate is established as an independent watchdog within the IRS and it reports annually on the agency's performance.

Of real concern is the instances where the valid SSN holder doesn't know that their number is being used, as the IRS has no mechanism for advising the true account holder of the possible identity theft.

Household employers have legal obligations to protect the personal identifying information of individuals they employ in their home, and are wise to be prudent in verifying the background and identity of individuals they bring into their private homes and employ as care givers for their vunerable family members.

The first indication that many household employers have that the taxpayer identification of their household staff may be suspect is receipt of a Social Security Administration "No Match" letter. This advises that the SSN and the name on a Form W-2 do not agree with SSA records.

How does a household employer verify identity information of newly hired employees?

• Perform a pre-employment background check that includes a SSN trace. Families can order these checks from the HomeWork Solutions' website.
• Complete the Form I-9 with the new hire at time of employment and make sure you look at the identity documents.
• Consider using e-Verify, the online system developed by the Department of Homeland Security for pre-employment screening that matches candidate information against government databases to validate employment eligibility. e-Verify Self-Check, a USCIS system that allows job applicants to confirm their work eligibility before they apply for a job, is rolling out nationwide. Self-Check does NOT relieve the employer of the obligation to comply with I-9 regulations.

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New Social Security Numbers to be Randomized

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In order to increase the number of SSN's available, beginning this month the SSA will be changing the way new SSNs are assigned. SSNs have always been assigned geographically. We can often tell where someone's SSN was issued based on the first three digits of the SSN.  The new method will issue the numbers randomly and also allow new digits in the 'area' fields (the first 3 digits).

The SSA is also hoping these changes will help reduce identity theft. The SSA will continue to offer SSN Verification Services to assist employers in determining name and number matches for employment tax reporting, and will continue working with the Department of Homeland Security's e-Verify program to help employers determine employment eligibility.

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Nanny Employment Eligibility Update: Legal Arizona Workers Act of 2007 Upheld

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The Legal Arizona Workers Act of 2007 requires that Arizona employers comply with the Federal Form I-9 regulations, or face state civil sanctions and/or criminal charges. Federal law already imposes the I-9 regulations on ALL US employers - this law adds the ability of the State of Arizona to utilize the application of state sanctions to further encourage compliance.

The Arizona law provides "every employer, after hiring an employee, shall verify the employment eligibility of the employee’ by using E-Verify." The use of E-Verify "creates a rebuttable presumption that an employer did not knowingly employ an unauthorized alien."

The Legal Arizona Workers Act was challenged in the courts by the Chamber of Commerce. The US Supreme Court has upheld the law in its entirety.

HomeWork Solutions provides payroll and payroll tax services for families who employ a nanny, housekeeper, elder caregiver, maid, or other household workers. HomeWork Solutions (HWS) will facilitate the e-Verify compliance for its clients for a modest administrative fee. It is VERY important to notify HWS immediately upon hire, as Federal regulations establish strict rules that require the immediate verification of newly hired workers - we cannot process e-Verify confirmations after the first week of work.

Nannies and other household workers in Arizona and a handful of other states including Virginia and the District of Columbia may use e-Verify Self Check to confirm their work eligibility before they apply for a job. Self-Check does NOT relieve the employer of the obligation to comply with I-9, and in the case of Arizona employers e-Verify regulations, but it does assure the applicant that they will not experience difficulties when the new employer does run the e-Verify checks.

The HomeWork Solutions' FAQ provides household employers with more information about US work authorization and the I-9 process.

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