Employers report wages to us on form W-2 (Wage and Tax Statement). We use this information
to maintain individual earnings records needed to administer our programs. We also
make wage data available to the IRS for tax purposes. Historically, if we could not
match the name and SSN reported on form W-2 to information in our records, we sent
a DECOR letter to the employee to resolve the discrepancy, or no-match. When we did
not have a valid employee address, we sent a DECOR letter to the employer. In addition,
we sent EDCOR letters to employers if the incidence of no-matches in the employer’s
wage report exceeded a certain number.
For tax years 1993 through 2005, we sent EDCOR letters to employers if their wage
reports included more than a certain number of employee names and SSNs that did not
match our records. We stopped sending these letters to employers as of tax year 2006
in response to litigation surrounding a proposed Department of Homeland Security (DHS)
regulation that would have required employers to follow a prescribed course of action
upon learning of a no-match. DHS later rescinded the proposed regulation. However,
in 2011, the Commissioner decided to discontinue the EDCOR letters process permanently.
We also did not send DECOR letters to employers for tax years 2007 through 2009 because
of the DHS proposed Safe Harbor regulation. However, we resumed sending the employer
DECOR letters in April 2011 for tax year 2010.
Although we suspended sending DECOR letters to employers, we never stopped sending
DECOR letters to employees. DECOR letters help us improve the accuracy of our earnings
records. EDCOR letters, however, have not proven to be effective for this purpose.