SSNs are routinely issued to U.S. citizens, and they are  also available to noncitizens lawfully admitted to the United States with  permission to work. SSA Individual Records and Earnings Reports Can Identify Some Unauthorized Work

SSA has two types of data useful to identifying unauthorized work— individual Social Security records and earnings reports. Its individual  records, which include name, date of birth, and SSN, among other things,  can be used to verify that a worker is providing the SSN that was assigned  to a person of that name. SSA Records Provide Verification Services to Improve Wage Data

SSA uses individual Social Security records in its Employee Verification  Service (EVS) and the Web-based SSN Verification Service (SSNVS),  which employers can use to assure themselves that the names and SSNs of  their workers match SSA’s records. Employer  use is voluntary. SSA also uses its records in a work eligibility verification system  developed by DHS called the Basic Pilot, which offers electronic  verification of work authorization for newly hired workers. There are two sets of data that are relevant to unauthorized work. Both could help identify some unauthorized work. SSA’s Nonwork Alien File

SSA is required by law to provide its Nonwork Alien File to DHS since it  suggests a group of people who are in the United States legally but may be  working without authorization. Earnings Suspense File

Another SSA earnings file, referred to as the Earnings Suspense File,  contains earnings reports in which the name and SSN do not match SSA’s  records, suggesting employer or worker error or, potentially, identity theft  and unauthorized work. We have reported that this file, which contained  246 million records as of November 2004, appears to include an increasing  number of records associated with unauthorized work. In addition, because the ESF contains  privileged taxpayer data, SSA cannot share this information with DHS  without specific legislative authorization. Closer Coordination by SSA, IRS, and DHS Could Improve Usefulness of SSA Earnings Data

Improving the usefulness of the data could help ensure that limited  enforcement resources are targeted effectively. SSA data could help  identify areas of unauthorized work, but closer collaboration among SSA,  IRS, and DHS can help to ensure that the most useful data are available in  a form that can be used efficiently for enforcement. We have reported previously  that the IRS program of employer penalties is weak, because of limited  requirements on employers to verify and report accurate worker names  and SSNs; we have recommended that IRS consider strengthening  employer requirements, a course that could over time improve the  accuracy of wage data reported to SSA. The Earnings Suspense and the Nonwork Alien files have potential,  but even the best information will not make a difference if the relevant  federal agencies do not have credible enforcement programs. To address unauthorized work more  meaningfully, IRS, DHS and SSA need to work together to improve  employer reporting, develop more usable and useful data sets for  suspicious earnings reports, and better target limited enforcement  resources.
Why GAO Did This Study

To lawfully work in the United States, individuals must have a valid Social Security number (SSN) and, if they are not citizens, authorization to work from the Department of Homeland Security (DHS). Noncitizens seeking work must provide both an SSN and evidence of work authorization to their employer. Yet individuals without these required authorizations have gained employment with false information. How these instances of unauthorized work can be identified or prevented challenges the federal agencies involved. Congress asked GAO to discuss how federal agencies can better share reported earnings data to identify unauthorized work. Specifically, this testimony addresses two issues: (1) the Social Security data that could help identify unauthorized employment and (2) coordination among certain federal agencies to improve the accuracy and usefulness of such data.

What GAO Found

The Social Security Administration (SSA) has two types of data that could be useful to reducing unauthorized work--individual Social Security records and earnings reports. Individual Social Security records, which include name, date of birth, and SSN, are used by SSA to provide verification services to employers wishing to assure themselves that the names and SSNs of their workers match SSA's records. SSA also uses Social Security records in a work authorization verification system developed by DHS called the Basic Pilot that offers electronic verification of worker status. These services are voluntary, and none are widely used by employers. SSA's earnings records provide additional information, which could be used as an enforcement tool to identify unauthorized work. Currently, SSA uses such records to produce two relevant files based on earnings records, which are the Nonwork Alien File and the Earnings Suspense File (ESF). The Nonwork Alien File contains earnings information posted to SSNs issued for nonwork purposes, suggesting that these individuals are working without authorization. The ESF contains earnings reports for which SSA is unable to match the name and SSN of the worker, suggesting employer error, SSN misuse, or unauthorized work activity. In addition, we have reported that the ESF, which contained roughly 250 million records as of December 2004, appears to include an increasing number of records associated with probable unauthorized work, but because of statutory constraints, the ESF is not available to DHS as an enforcement tool. Improving the usefulness of SSA data could help identify unauthorized work and ensure that limited enforcement resources are targeted effectively. Ensuring that the most useful data are available requires close coordination among the three federal agencies involved in collecting and using the data--SSA, the Internal Revenue Service (IRS), and DHS. We have previously recommended that IRS work with DHS and SSA as it considers strengthening its employer wage reporting regulations, as such action could improve the accuracy of reported wage data, and that DHS, with SSA, determine how best to use such wage data to identify potential illegal work activity. Efforts to improve data will only make a difference, however, if agencies work together to improve employer reporting and ensure they can conduct effective worksite enforcement programs.