Social Security Numbers: Coordinated Approach to SSN Data Could  
Help Reduce Unauthorized Work (16-FEB-06, GAO-06-458T). 	 
                                                                 
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.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-458T					        
    ACCNO:   A47067						        
  TITLE:     Social Security Numbers: Coordinated Approach to SSN Data
Could Help Reduce Unauthorized Work				 
     DATE:   02/16/2006 
  SUBJECT:   Aliens						 
	     Data integrity					 
	     Employees						 
	     Employment 					 
	     Fraud						 
	     Identity verification				 
	     Interagency relations				 
	     Personnel records					 
	     Social security number				 
	     Strategic planning 				 
	     Information sharing				 
	     Basic Pilot Program				 
	     SSA Earnings Suspense File 			 

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GAO-06-458T

     

     * Background
     * SSA Individual Records and Earnings Reports Can Identify Som
          * SSA Records Provide Verification Services to Improve Wage Da
          * SSA Earnings Data May Be Used to Identify Some Unauthorized
               * SSA's Nonwork Alien File
               * Earnings Suspense File
     * Closer Coordination by SSA, IRS, and DHS Could Improve Usefu
     * Concluding Observations
     * Contacts and Acknowledgments
          * Order by Mail or Phone

Testimonybefore the Subcommitteeson Social Security and on Oversight,
Committee on Ways and Means,

House of Representatives

United States Government Accountability Office

GAO

For Release on Delivery Expected at 10:00 a.m. EST

Thursday, February 16, 2006

SOCIAL SECURITY NUMBERS

Coordinated Approach to SSN Data Could Help Reduce Unauthorized Work

Statement of Barbara D. Bovbjerg, Director

Education, Workforce, and Income Security Issues

GAO-06-458T

Messrs. Chairmen and Members of the Subcommittees:

I am pleased to be here today to discuss Social Security numbers (SSNs)
and their use in preventing and detecting unauthorized work. To lawfully
work in the United States, individuals must have a valid SSN and, if they
are not citizens, authorization to work from the Department of Homeland
Security (DHS). Noncitizens seeking work are required to provide both an
SSN and evidence of work authorization to their employers. Yet individuals
without these required authorizations can gain employment with false
information. How these instances of unauthorized work can be identified or
prevented challenges the federal agencies involved.

In prior GAO work on these issues, we have reported on the use of Social
Security Administration (SSA) data for identity and employment eligibility
verification. Although SSA's verification systems have improved, use of
SSA information in worksite enforcement continues to be challenging. Today
I will discuss two issues: (1) the Social Security data that could help
identify some unauthorized employment and (2) coordination among SSA, DHS,
and the Internal Revenue Service (IRS) to improve the accuracy and
usefulness of such data.

My statement is based primarily on prior GAO work on these topics.1 We are
presently conducting additional work for these subcommittees examining the
use of SSA data for detecting unauthorized work. To determine how SSA and
DHS are coordinating to improve earnings data, we conducted interviews
with officials from SSA, the SSA Office of the Inspector General, and DHS.
In addition, we obtained and reviewed data from SSA on individuals who had
reported earnings under a nonwork SSN, and we reviewed other documentation
provided to us by these agencies. We began this review in October 2005 in
accordance with generally accepted government auditing standards, and our
work is ongoing.

In summary, SSA has two types of data that could be useful for addressing
unauthorized work- Social Security records for individuals and earnings
reports. Individual Social Security records include name, date of birth,
and SSN, among other things. SSA uses these data to provide SSN
verification services free of charge to employers wishing to assure
themselves that the names and SSNs that their workers provided match SSA's
records. SSA also uses Social Security records in a work authorization
verification system called the Basic Pilot program developed by DHS, which
offers electronic verification of worker status. These systems are
voluntary and not widely used by employers. SSA's earnings records provide
a different sort of information that could be used for identifying
unauthorized work. SSA uses such records to produce two relevant files.
SSA's Nonwork Alien File contains earnings reports that are posted to SSNs
that were issued for nonwork purposes, which suggests individuals are
working without DHS work authorization. By law, SSA provides nonwork alien
information to DHS annually, and our ongoing work for you suggests that a
number of these records are associated with people who became work
authorized some time after receiving their nonwork SSNs. A second file of
interest, the Earnings Suspense File (ESF), contains earnings reports in
which the name and SSN do not match SSA's records.2 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.3

1GAO, Social Security: Better Coordination among Federal Agencies Could
Reduce Unidentified Earnings Reports, GAO-05-154 (Washington, D.C.:
February 2005); GAO, Immigration Enforcement: Weaknesses Hinder Employment
Verification and Worksite Enforcement Efforts, GAO-05-813 (Washington,
D.C.: August 2005); and GAO, Tax Administration: IRS Needs to Consider
Options for Revising Regulations to Increase the Accuracy of Social
Security Numbers on Wage Statements, GAO-04-712 (Washington, D.C: August
2004)

Improving the usefulness of SSA data could help identify some 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, 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.

                                   Background

The Social Security Act of 1935 authorized the SSA to establish a
record-keeping system to help manage the Social Security program and
resulted in the creation of the SSN. SSA uses the SSN as a means to track
workers' earnings and eligibility for Social Security benefits. Through a
process known as enumeration, each eligible person receives a unique
number, which SSA uses for recording workers' employment history and
Social Security benefits. 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. Lawfully admitted noncitizens who lack DHS
work authorization may qualify for an SSN for nonwork purposes when a
federal, state, or local law requires that they have an SSN to obtain a
particular welfare benefit or service. In this case, the Social Security
card notes that the SSN is "Not Valid for Employment."4 As of 2003, SSA
had assigned slightly more than 7 million nonwork SSNs. Over the years,
SSA has tightened the requirements for assigning nonwork SSNs.

2 SSA receives tax records of employee earnings from employers via the
IRS's Form W-2 (Wage and Tax Statement).

3 GAO-05-154

In 1986, Congress passed the Immigration Reform and Control Act (IRCA),
which made it illegal for individuals and entities to knowingly hire and
continue to employ unauthorized workers. The act established a two-pronged
approach for helping to limit the employment of unauthorized workers: (1)
an employment verification process through which employers are to verify
newly hired workers' employment eligibility and (2) a sanctions program
for fining employers who do not comply with the act. Under the employment
verification process, workers and employers must complete the Employment
Eligibility Verification Form (Form I-9) to certify that the workers are
authorized to work in the United States. Those employers who do not follow
the verification process can be sanctioned.

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. These records are used in
verification services that are available free of charge to employers on a
voluntary basis. SSA's earnings reports could also be used to identify
some unauthorized work by reporting noncitizens who may have worked
without authorization and employers who have a history of providing
SSN/name combinations that do not match SSA records.

4 Cards issued prior to 1982 do not contain this notation.

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. The services, designed to ensure accurate
employer wage reporting, are offered free of charge. Employer use is
voluntary. Although these systems only confirm whether submitted names and
SSNs match, they could help employers identify workers who provide an SSN
with fictitious information.

Over the years, SSA has developed several different verification methods
under EVS. For example, employers may submit lists of workers' names and
SSNs by mail on a variety of media, such as magnetic tapes or diskettes.
Alternatively, employers may call a toll-free number or present a
hard-copy list via fax, mail, or hand delivery to a local SSA office. SSA
verifies the information received from employers by comparing it with
information in its own records. SSA then advises the employer whether
worker names and SSNs match. EVS offers the benefit of verifying name and
SSN combinations for a company's entire payroll. However, the system would
not be able to detect a worker's misuse of another person's name and SSN
as long as the name and SSN matched. Employers do not widely use this
service.

In an attempt to make verification more attractive to employers, in 2005,
SSA implemented the Web-based SSNVS. It is designed to respond to employer
requests within 24 hours. Requests of up to 10 worker names and SSNs can
be verified instantaneously. Larger requests of up to 250,000 names can be
submitted in a batch file, and SSA will provide results by the next
business day. While this new system is attracting more employer interest,
it is still not widely used.

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.5 Use of this
program by employers is also voluntary, and the service has been available
nationwide only since December 2004. Employers who agree to participate
must electronically verify the status of all newly hired workers within 3
days of hire, using information that a new hire is required to provide.
Under this program, an employer electronically sends worker data through
DHS to SSA to check the validity of the SSN, name, date of birth, and
citizenship provided by the worker. SSA records are used to confirm
information on citizens. For noncitizens, SSA confirms SSN, name, and date
of birth, then refers the request to DHS to verify work authorization
status against DHS's automated records.6 If DHS cannot verify work
authorization status for the submitted name and SSN electronically, the
query is referred to a DHS field office for additional research by
immigration status verifiers. If SSA is unable to verify the SSN, name,
and date of birth or DHS record searches cannot verify work authorization,
a tentative nonconfirmation response is transmitted to the employer. After
checking the accuracy of the information and resubmitting the information,
if necessary, the employer must advise the worker of the finding and refer
him or her to either DHS or SSA to correct the problem. During this time,
employers are not to take any adverse actions against those workers
related to verification, such as limiting their work assignments or pay.
When workers do not contest their tentative nonconfirmations within the
allotted time, the Basic Pilot program issues a final nonconfirmation.
Employers are required to either immediately terminate employment or
notify DHS of their continued employment.

5 The Basic Pilot program was authorized in 1996 through the Illegal
Immigration Reform and Immigrant Responsibility Act (IIRIRA), which
required that the Attorney General, (now DHS) develop and test three pilot
programs to assist employers in verifying workers' identity and work
eligibility. The Basic Pilot program was developed and made available to
employers in six states starting in 1997. In 2003, Congress required DHS
to expand the verification service to all 50 states by December 2004, and
DHS met that requirement. To improve its effectiveness and increase
participation, DHS converted the program to a Web-based system in July
2004.

Like SSA's verification services, the Basic Pilot is voluntary and is not
widely utilized. As of January 2006, about 5,500 businesses nationwide had
registered to participate, although a significantly smaller number of
these are active users.7 Active participants have made about 4.7 million
initial verification requests over a 5-year period (981,000 requests were
made in fiscal year 2005). DHS reported on actions taken to address
weaknesses in the program that had been identified during the early years
of the program. They included delays in updating immigration records,
erroneous nonconfirmations, and program software that was not user
friendly. We subsequently reported on additional challenges, specifically,
the capacity constraints of the system, its inability to detect identity
fraud, and the fact that the program is limited to verifying work
authorization of newly hired workers.8

6 The DHS data are maintained by the U.S. Citizenship and Immigration
Service, (USCIS).

7 This indicates the number of businesses that have signed memorandums of
understanding with DHS and is not indicative of the number of active
participants.

SSA Earnings Data May Be Used to Identify Some Unauthorized Work

SSA's earnings records can also provide information on unauthorized work.
There are two sets of data that are relevant to unauthorized work. The
first set, the Nonwork Alien File, contains earnings reports for SSNs that
were issued for nonwork purposes. The second set, the Earnings Suspense
File, contains earnings reports in which the name and SSN do not match.
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.9 Since 1998, SSA has provided DHS annual
data on over half a million persons with earnings listed under nonwork
SSNs. The file includes annual earnings amounts, worker names and
addresses, and employer names and addresses as well.

DHS has found this file to be of little use to enforcement activities,
however. According to DHS officials, the file is currently not an
effective tool for worksite enforcement due in part to inaccuracies in the
data and the absence of some information that would help the department
efficiently target its enforcement.10

In fact, because SSA only updates work authorization status at the request
of the SSN holder, individuals in the file may now be U.S. citizens or
otherwise legal workers who simply have not updated their status with SSA.
Our ongoing work in this area suggests that a number of these records are
indeed associated with people who later obtained permission to work from
DHS. SSA policy is to update work authorization status when the SSN holder
informs the agency of the status change and provides supporting
documentation.11 Unless the individual informs SSA directly of the status
change, SSA's enumeration records will continue to show the person as
unauthorized to work and will record his or her earnings to the Nonwork
Alien File. Currently, the extent to which such noncitizens are included
in the file is unknown, but SSA and DHS officials have both acknowledged
that the file may include a number of people who are currently authorized
to work.

8 GAO-05-813 .

9 IIRIRA, Section 414.

10 In prior years, DHS officials cited an inability to access the file,
because SSA sent the data to them via a computer mainframe cartridge that
was incompatible with DHS's systems. SSA now supplies the file in a format
that is accessible to DHS agents.

11 Individuals are not required to update such changes with SSA, although
since 2002 the agency has encouraged them to do so. SSA will remove the
nonwork notation from the SSN and reissue a card to individuals who were
originally assigned a nonwork SSN if the individual provides SSA
documentation of a change in the individual's work status by DHS.

DHS officials said that the file would be of greater value if it contained
DHS's identifying numbers-referred to as alien registration numbers.
According to DHS officials, because persons in the file do not have an
identifier in common use by both agencies, they cannot automatically be
matched with DHS records. As a result, DHS officials told us that they use
names and birth dates to match the records, which can result in mismatches
because names can change and numbers in birth dates may be transposed. SSA
officials have said that generally they do not collect alien registration
numbers from noncitizens. Collecting the alien registration number and
providing it in the Nonwork Alien File is possible, they stated, but would
require modifications to SSA's information systems and procedures. They
also noted that SSA would only be able to collect the alien registration
number when noncitizens are assigned an SSN or when such an individual
updates his or her record. As part of its procedures, SSA is required to
verify the immigration status of noncitizens before assigning them an SSN,
which requires using alien registration numbers.12 However, some
noncitizens, such as those who have temporary visas, (e.g. students) may
not have an alien registration number. In these cases, SSA would not be
able to include the number in the Nonwork Alien File.

The time it takes SSA to validate earnings reports and convey the Nonwork
Alien File to DHS also makes the file less effective for worksite
enforcement. When SSA finishes its various processes to ensure that the
file includes the appropriate data, the reported earnings can be up to 2
years old. By that time, many of the noncitizens included in the file may
have changed employers, relocated, or changed their immigration status,
resulting in out-of-date data on individuals or ineffective leads for DHS
agents.13

12 To do this, SSA field office staff use the alien registration number,
in part, to query DHS's records, through DHS's Systematic Alien
Verification for Entitlements (SAVE) program, which provides certain DHS
data online regarding aliens with such numbers. In addition, SSA field
office staff is instructed to ask noncitizens to present their immigration
and identity documents, which contain their alien registration numbers for
verification.

A DHS official told us that if the Nonwork Alien File were to contain
industry codes for the reporting employers, DHS could target those in
industries considered critical for homeland security purposes, which would
be consistent with DHS's mission and enforcement priorities. Having
information about the industries the employers are in would help them
better link the data to areas of high enforcement priority, such as
airports, power plants, and military bases.

  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. SSA's
Office of the Inspector General has used the ESF to identify employers who
have a history of providing names and SSNs that do not match.

When SSA encounters earnings reports with names and SSNs that do not
match, it makes various attempts to correct them using over twenty
automated processes. However, about 4 percent of all earnings reports
still remain unmatched and are electronically placed in the ESF, where SSA
uses additional automated and manual processes to continue to identify
valid records. Forty-three percent of employers associated with earnings
reports in the ESF are from only 5 of the 83 broad industry categories,
with eating and drinking establishments and construction being the top
categories. A small portion of employers also account for a
disproportionate number of ESF reports. For example, only about 8,900
employers-0.2 percent of all employers with reports recorded in the ESF
for tax years 1985-2000-submitted over 30 percent of the reports we
analyzed.14

13 Under the current process, SSA receives wage information from employers
annually. Once the earnings reports are received, SSA will ensure the
validity of the reported information before sending it to DHS. As a
result, DHS receives the data 1 to 2 years after the earnings occur. For
example, SSA officials told us that they SSA received earnings from
employers based on tax year 2004 in early 2005. After receipt, SSA
electronically validated such information throughout the summer and fall
of that year, and sent all reported earnings associated with a nonwork SSN
to DHS in January 2006.

14 GAO-05-154 .

Our past work has documented that individuals who worked prior to
obtaining work authorization are a growing source of the unmatched
earnings reports in the ESF that are later reinstated to a worker's
account. Once workers obtain a valid SSN, they can provide SSA evidence of
prior earnings reports representing unauthorized employment prior to
receiving their SSN. Such earnings reports can then be used to determine a
worker's eligibility for benefits.15

DHS officials believe that the ESF could be useful for targeting its
limited worksite enforcement resources. For example, they could use the
ESF to identify employers who provide large numbers of invalid SSNs or
names and SSNs that do not match. They told us that these employers may
knowingly hire unauthorized workers with no SSN or fraudulent SSNs and
that employers who are knowingly reporting incorrect information about
their workers might also be involved in illegal activities involving
unauthorized workers.

However, it is not clear that the ESF, which is much larger than the
Nonwork Alien File, would be manageable or allow for targeted enforcement.
The ESF contains hundreds of millions of records, many unrelated to
unauthorized work, making it difficult to use for targeting limited
resources. While the ESF may help identify some of the most egregious
employers of unauthorized workers, in terms of poor earnings reporting,
its focus is not on unauthorized workers. Our work has shown that most of
the reinstatements from the file belong to U.S.-born citizens, not to
unauthorized workers.16 In addition, because the ESF contains privileged
taxpayer data, SSA cannot share this information with DHS without specific
legislative authorization.17 SSA's Office of the Inspector General has
recommended that SSA seek legislative authority to share this data with
DHS, but SSA responded that it is beyond the agency's purview to advance
legislation to amend the Internal Revenue Code in order to allow DHS
access to tax return information.18 IRS officials have also expressed
concern that sharing this data could decrease tax collections and
compliance.19 We are examining the usefulness of SSA data to DHS for these
subcommittees, and will consider ESF issues as part of this work.

15 GAO-05-154.

16 GAO-05-154 .

17 Internal Revenue Code Section 6103 provides that tax returns and return
information are confidential and may not be disclosed by IRS and others
having access to the information, with certain specific exceptions.
Because the confidentiality of tax data is considered crucial to voluntary
compliance, if agencies want to establish new efforts to use taxpayer
information, executive branch policy calls for a business case to support
sharing tax data.

    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.

Under the current data-sharing arrangement, DHS officials believe the
agency would have to invest significant resources to determine whether
employers it targets are really hiring persons who are not work
authorized. DHS has stated that determining which nonwork SSN holders are
now authorized to work may not be cost-effective and would pull resources
from other national security-related initiatives.20 Neither SSA nor DHS is
able to easily and quickly update work status because they lack a common
identifier for their records. Updating status without a common identifier
may not be practical because different spellings or name variations
confound large-scale matching efforts. For example, an August 2005 report
from the SSA's Office of the Inspector General highlights a substantial
proportion of cases in which names were inconsistent between SSA and
DHS.21 In at least six reports in recent years, SSA's Office of the
Inspector General has recommended or mentioned prior recommendations that
SSA work with DHS to update information about work authorization.22 SSA
officials maintain that it is their policy to make changes to the Social
Security record only if the SSN holder initiates the changes and provides
evidentiary documents from DHS. SSA further states that a "resolution of
the discrepant information between DHS and SSA would require more than a
simple verification."23

18 Social Security Administration, Office of the Inspector General, Social
Security Number Misuse in the Service, Restaurant, and Agriculture
Industries, A-O8-05-25023 (Baltimore, Maryland: April 2005); and Obstacles
to Reducing Social Security Number Misuse in the Agriculture Industry,
A-08-99-41004 (Baltimore, Maryland: January 2001).

19 GAO-05-154 .

20 GAO-05-154 .

21Social Security Administration, Office of the Inspector General,
Reported Earnings Prior to the Issuance of a Social Security Number,
A-03-04-14037 (Baltimore, Maryland: August 2005).

Despite the many problems with the data, there are steps that could be
taken to improve them. For example, the employers who submit the most
earnings reports for nonwork SSNs might be good candidates for outreach
and education about verifying work eligibility. SSA's Office of the
Inspector General officials suggested that DHS send letters to employers
of persons with nonwork SSNs. These letters could encourage persons listed
as having nonwork SSNs, who are now authorized to work, to update their
records. The ESF also has the potential to provide useful information to
DHS, but this information has protected tax status. Although some of the
same difficulties that pertain to the Nonwork Alien File could also affect
the usefulness of the ESF to DHS enforcement efforts, if these challenges
could be overcome, authorizing transmittal of at least some of the ESF
information to DHS might be warranted.

Producing accurate, useful data will require substantial continued effort
on the part of SSA, DHS, and the IRS: these efforts will be of little
value, however, if the data are not used for enforcement and to stimulate
changes in employer and employee behavior. 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.24 We have also reported that, consistent with DHS's
primary mission in the post-September 11 environment, DHS enforcement
resources have focused mainly on critical infrastructure industries in
preference to general worksite enforcement. 25 In such circumstances,
coordination to leverage usable and useful SSA data is essential to ensure
that limited DHS worksite enforcement resources are targeted effectively.

22Social Security Administration, Office of the Inspector General, Social
Security Administration Benefits Related to Unauthorized Work,
A-03-03-23053 (Baltimore, Maryland: March 2003); Profile of the Social
Security Administration's Non-Work Alien File, A-14-03-23071 (Baltimore,
Maryland: September 2003); Reported Earnings Prior to the Issuance of a
Social Security Number, A-03-04-14037 (Baltimore, Maryland: August 2005);
Unauthorized Work Social Security Numbers at the Department of Defense,
A-03-05-25127 (Baltimore, Maryland: September 2005); Impact of
Nonimmigrants Who Continue Working after Their Immigration Status Expires,
A-08-05-15073 (Baltimore, Maryland: September 2005); and Work Activity for
Social Security Numbers Assigned for Nonwork Purposes in the State of
Utah, A-14-01-11048 (Baltimore, Maryland: March 2002).

23SSA, OIG, A-03-04-14037; A-03-05-25127.

24 GAO-04-712 .

                            Concluding Observations

The federal government likely can make use of information it already has
to better support enforcement of immigration, work authorization and tax
laws. 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. In fact,
sharing earnings data to identify potential unauthorized workers could
unnecessarily disclose sensitive taxpayer information if the data are not
utilized by 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. We look
forward to contributing to this endeavor as we continue to conduct our
work on using SSA data to help reduce unauthorized work.

This concludes my prepared statement. I will be happy to answer any
questions you may have.

                          Contacts and Acknowledgments

For questions regarding this testimony, please call Barbara Bovbjerg at
(202) 512-7215. Other key contributors to this statement were Blake
Ainsworth, Assistant Director; Lara Laufer, Analyst-in-Charge; Beverly
Crawford; Susan Bernstein; Michael Brostek; Rebecca Gambler; Jason
Holsclaw; Daniel Schwimer; Richard Stana; Vanessa Taylor; Walter Vance;
and Paul Wright.

(130559)

25 GAO-05-813 and GAO, Immigration Enforcement: Challenges to Implementing
the INS Interior Enforcement Strategy, GAO-02-861T . (Washington, D.C.:
June 19, 2002)

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Highlights of GAO-06-458T , a report to the Chairmen, Subcommittees on
Social Security and on Oversight, Committee on Ways and Means, House of
Representatives

February 16, 2006

SOCIAL SECURITY NUMBERS

Coordinated Approach to SSN Data Could Help Reduce Unauthorized Work

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.

The subcommittees 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.

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.
*** End of document. ***