No Match Resolution Process Working Poorly

From a report by Social Security's Inspector General:

As part of the Annual Wage Reporting process, the Social Security Administration (SSA) attempts to match the names and Social Security numbers (SSN) on Wage and Tax Statements (Form W-2) that are submitted by employers against SSA’s Numident file — the repository for all issued SSNs. A Form W-2 that contains a name and SSN combination that matches the Numident file is posted to the Master Earnings File (MEF). However, in cases where the name and SSN combination cannot be matched to SSA’s records, the wage information on the Form W-2 is posted to the ESF—the repository of unmatched items.

To resolve name/SSN combinations that cannot be matched, also known as “no-matches,” SSA began sending EDCOR letters to employers in 1994. These letters are commonly called “no-match letters.” The EDCOR letter was designed to help educate employers about their name/SSN no-matches and remind employers about the importance of submitting accurate information on Forms W-2. The EDCOR letter explains to employers that some of the name/SSN combinations reported do not agree with SSA’s records and asks employers to submit a Statement of Corrected Income and Tax Amount (Form W-2C) within 60 days for each SSN listed on the letter. In addition, it explains that some of the name/SSN no-matches may be the result of common mistakes, such as transcriptions or typographical errors, incomplete or blank name/SSN, or the failure of an employee to report a name change to SSA. SSA mails EDCOR letters to employers on a flow basis beginning in February of each year. As shown in Table 1, over the years, SSA has used various criteria to determine whether employers should receive an EDCOR letter....

SSA’s EDCOR letters were not effective in communicating wage-reporting problems to employers and reducing the size of the ESF. While EDCOR letters were established to help employers resolve name/SSN no-matches, for TY 2005, we found about 74 percent of employers who reported wage items with mismatched names and SSNs did not receive an EDCOR letter primarily because of the Agency’s criteria for issuing the letters. In addition, employers who received EDCOR letters were not always informed about all of their no-matches because the EDCOR letters only listed up to 500 mismatched SSNs. For example, about 1,650 employers received EDCOR letters that did not include about 1.7 million of their 2.6 million no-matches. Moreover, our review found EDCOR letters provided employers with limited information needed to resolve name/SSN no-matches. The letters only included mismatched SSNs and not the reported names.

Furthermore, name/SSN no-matches were less likely to be resolved under the EDCOR process as compared to the DECOR process. In TYs 2001 through 2005, about 680,500 wage items were reinstated because of the DECOR process, whereas only 60,500 wage items were reinstated because of the EDCOR process. Finally, although SSA had developed a more effective process for employers to review and correct name/SSN no-matches electronically, we found employers seldom used the Business Service Online, which is a suite of Internet services for employers to exchange information with SSA.