SSN Policy Manual

Employment Issues

document filed with the Internal Revenue Service unless it is shown that the failure is due to reasonable cause and not willful neglect. The regulation interpreting the statute provides: Under Section 301.6109-1(c) a payer is required to request the identifying number of the payee. If after such a request has been made, the payee does not furnish the payer with his identifying number, the penalty will not be assessed against the payer. The Omnibus Budget Restoration Act of 1983 (Pub. Law 101-239, Title VII, Section 771 l(b)(l)), repealed Section 6676 of the Internal Revenue Code effective for statements or documents filed after December 31, 1989. Since December 31,1989, Code Section 6723 has governed the failure to comply with information reporting requirements. Section 6723 provides that a penalty of $50.00 shall be assessed for each failure to comply with a reporting requirement. However, 26 USC $6724, provides for a waiver of any penalties assessed under the code upon a showing of reasonable cause. Section 6724(a) provides: No penalty shall be imposed under this part with respect to any failure if it is shown that such failure is due to reasonable cause and not willful neglect. 26 USC §6724(a). Therefore, the Code and regulations mandate a payer only to request the identifying number of the employee or payee. If after such a request has been made, the payee does not furnish the payer with his identifying number, the penalty will not be assessed against the payer, upon the filing of an affidavit with the Internal Revenue Service stating that a request for the payee's identifying number was made. How to Hire an Unenumerated Employee Most employers believe that they are required by law to obtain a social security number from each employee. Additionally the advice from the employer's attorney or accountant usually reinforces this opinion; often the advice further suggests they should terminate the employee in question. However, closer examination of the law and regulation is prudent. Each American, enumerated or not, has broad, legally protected rights. Violating a person's rights can lead employers into serious legal and financial problems . . . and in some cases, even jail. Be certain that your decision to terminate an unenurnerated employee is based on competent legal advice from an attorney who can represent you in court. Getting legal advice from an accountant is unwise. Additionally, employers also need to recognize that the Internal Revenue Service will not appear in court on their behalf.. . even when they advise terminating an unenumerated employee. According to the Constitution of the United States, only Congress can make law. Laws become codified into the United State Code books after they pass through and are finally signed by our President. Often, Congress delegates authority to various departments to create regulations for implementing these laws. These regulations are codified into the United States Code of Federal Regulations.