As an employer you have an enormous number of forms that must be filed, whether with the Department of Labor, Immigration and Customs Enforcement, the IRS or any other agency or group which may exercise authority over your business. You can almost drown in these forms and sometimes just from sheer repetition they don’t all match.
Some of the more complex interactions of forms may relate to those under the Affordable Care Act (ACA) and I-9. Under the Affordable Care Act, certain employers must file a form 1095-C, which reports health insurance coverage offered to the employee in the prior year. This form is provided to the IRS and includes identifying information such as the employee’s social security number. Upon receipt, the IRS checks the forms against their database and may determine there is no match for the documentation, particularly in the event that the social security number is incorrect. The IRS will report the error to the employer. Failure to resolve this “no-match” situation can result in penalties to both the employee and the employer.
If you receive notice from the IRS that an employee has a “no-match,” you are forced to consider that an employee has possibly not been entirely truthful about his or her status and identifying information. While the Social Security number is not required for the completion of an I-9, a “no-match” of this type may lead the IRS or Immigration and Customs Enforcement (ICE) to believe that the employer had “constructive knowledge” that the employee was not legally authorized to work in the United States.
For most employers, the first place to cross-check is the documents themselves as typos are fairly common by employers as well as in the federal database. Then employers should require that the employee provide information regarding whether or not the data is accurate and if it can be corrected.
Employees should be notified of these issues and first be given the opportunity to correct the error. However, if the employee fails to cooperate, or the error is not corrected, the employer may need to terminate the employee. If efforts at correction fail, the employer needs to think carefully about whether or not there is the potentiality that the employee is not legally authorized to work in the United States or is using an alternate identity for other purposes.
For more detailed information on these issues see the recent blog post from Lori T. Chesser, Mike Gilmer, and Susan Freed: Form 1095-C and I-9 Compliance: How to Handle “Mismatches.”