Social Security Administration Backlog: Impact to International Assignees Coming to the U.S.
We are aware that, in some key cities on the east coast, as well as in Texas, California, and Washington, the U.S. Social Security Administration (SSA) is struggling to keep up with the demand to issue social security numbers (SSN) to foreign nationals coming to the U.S. for permanent work. The current backlog in some Social Security Administrative areas can be as much as eight weeks.
Impact of Backlog to International Assignees and Employers
A foreign national coming to the U.S. for permanent work will typically need a SSN to buy or rent a home, set up utility services, obtain a mobile phone, purchase or lease a car, and open up a bank account. The sponsoring employer will need the SSN to set up payroll for federal, state, and local tax deductions, and for applicable social security and Medicare deductions. Failure on the part of the employee to obtain the SSN can result in major inconveniences for the employee; failure of the employer to report these deductions using the employee’s SSN can result in IRS penalties.
Although not an ideal situation, work can begin prior to the inpatriate obtaining a SSN; in fact, delaying the start of employment can have legal consequences for both the employer and the foreign national. There is consistent guidance between the SSA, the Internal Revenue Service (IRS), and the U.S. Department of Justice (DOJ) on initiating employment without a SSN. Per the Program Operations Manual System (POMS), which is administered by the SSA, if the SSN is not yet available, a dummy number should be used.
It is important to note that once the SSN is issued by the SSA, the employer must submit additional paperwork to update the individual’s information with the correct number. The IRS has historically considered delays caused by SSA backlogs favorably, in which "reasonable cause" exists for not asserting penalties. The employer is advised to keep documentation to show that the failure to supply a SSN on a W-2, 1099, or 1042-S is caused by the SSA's backlog.
Additional Resource for Relocation Managers
We will continue to monitor this situation and keep you apprised of any developments. Please note that Cartus is not intending to provide tax and legal advice and you should consult with your own tax and legal advisors for further guidance. Please contact your Cartus representative if you have any additional questions on the delays, or email us at firstname.lastname@example.org.
For additional guidance, please visit the IRS website. For specific information on issuing SSN’s to foreign national workers please visit: https://www.irs.gov/individuals/international-taxpayers/delays-in-issuing-ssns-to-aliens-by-the-social-security-administration.