GAO-06-814R DHS Use of Earnings Data 

United States Government Accountability Office

Washington, DC 20548 

July 11, 2006 

The Honorable Jim McCrery 

Chairman 

Subcommittee on Social Security 

Committee on Ways and Means 

House of Representatives

The Honorable Jim Ramstad 

Chairman 

Subcommittee on Oversight 

Committee on Ways and Means 

House of Representatives

Subject: Immigration Enforcement: Benefits and Limitations to Using Earnings Data to 

Identify Unauthorized Work 

To lawfully work in the United States, individuals must provide identification and evidence of 

work authorization to their employers. Individuals who are not U.S. citizens must have 

authorization to work from the Department of Homeland Security (DHS). Yet individuals 

without these required authorizations can gain employment using fraudulent documents 

containing fictitious information or information that belongs to someone else or by being 

hired by an employer who does not follow the law. In prior GAO work on these issues, we 

have reported that Social Security Administration (SSA) and Internal Revenue Service (IRS) 

data can be useful for identity and employment eligibility verification as well as to facilitate 

more effective worksite enforcement. However, the use of these data has drawbacks since 

they contain some erroneous information and information about hundreds of thousands or 

even millions of U.S. citizens and work-authorized aliens. Because the confidentiality of tax 

data is considered crucial to voluntary taxpayer compliance, IRS is restricted under Section 

6103 of the Internal Revenue Code from sharing taxpayer information with third parties 

except in very limited circumstances. Currently, IRS is not authorized to share taxpayers’ 

information for worksite enforcement efforts. However, SSA is authorized to provide DHS a 

specific data file that contains information compiled from employer earnings reports and SSA 

data. 

The House and the Senate are considering legislation to reform immigration laws and 

strengthen enforcement. As part of these deliberations, there are proposals to share earnings 

data with DHS for worksite enforcement. To better understand how such data could be used, 

the Subcommittees on Social Security and on Oversight of the House Ways and Means 

Committee requested that we assess DHS’s use of the data it already receives from SSA and 

determine what changes or improvements could be made to effectively use earnings data for 

enforcement.
In summary, sharing earnings data has the potential to assist DHS in detecting unauthorized 

work and enforcing immigration laws. However, DHS has not yet fully determined how it 

would use earnings data in a program of general worksite enforcement. As policymakers 

consider providing DHS additional earnings data, they should also consider how DHS would 

use these data and how DHS would safeguard taxpayer information. To address the 

subcommittees’ request, we describe the earnings data that might be useful to DHS in its 

worksite enforcement efforts, highlighting both the benefits and the limitations associated 

with each source of data. 

We built on prior GAO work, as cited in the attached briefing, and gathered additional 

information from SSA, IRS, DHS, and the Department of Health and Human Services (HHS). 

To determine what information is most useful to DHS and how it could be used effectively, 

we interviewed agency officials to obtain their perspectives on the potential benefits and 

limitations of using various data that provide information on unauthorized workers. We 

examined five datasets: SSA’s Nonwork Alien File, SSA’s Earnings Suspense File, HHS’s 

National Directory of New Hires, information on income tax returns reporting wage income 

filed using Individual Taxpayer Identification Numbers, and DHS’s current electronic

employment eligibility verification program transaction data. We used this information and 

our analyses of the datasets to assess what specific sources could provide the most useful 

information consistent with DHS’s needs and priorities. We assessed the barriers DHS might 

face in using the data as an effective tool for worksite enforcement given DHS’s limited

worksite enforcement resources. Because of time constraints, we did not determine the

amount of additional resources DHS would have to invest in order to make these sources 

useful. Further, although we interviewed knowledgeable officials about the contents of these 

files, we did not determine the extent to which these databases actually contain information 

about unauthorized work. For more detailed information about our scope and methodology, 

see the appendix. We performed our work between October 2005 and June 2006 in 

accordance with generally accepted government auditing standards. 

We are sending copies of this briefing to the Secretary of Homeland Security, the 

Commissioner of Social Security, the Commissioner of Internal Revenue, the Secretary of 

Health and Human Services, and other interested parties. Copies will also be made available 

to others upon request. In addition, the report will be available at no charge on GAO’s Web 

site at http://www.gao.gov. Please contact us at the numbers shown below if you or your staff 

have any questions about this report. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this briefing. 

Sincerely yours, 

Barbara D. Bovbjerg Richard M. Stana Michael Brostek

Director, Education, Workforce, 

and Income Security Issues 

(202) 512-7215 

bovbjergb@gao.gov

Director, Homeland 

Security and Justice Issues 

(202) 512-8777 

stanar@gao.gov 

Director, Tax Issues 

Strategic Issues Team 

(202) 512-9110 

brostekm@gao.gov 

Enclosure 

(130528)

Page 2 GAO-06-814R DHS Use of Earnings Data 
Briefing for Congressional Staff Page 1

IMMIGRATION ENFORCEMENT: 

Benefits and Limitations to Using Earnings 

Data to Identify Unauthorized Work 

In our prior work, we have 

reported that certain earnings 

data collected by the Social 

Security Administration (SSA) 

and the Internal Revenue Service 

(IRS) from employers could be 

useful to the Department of 

Homeland Security (DHS) for 

identifying unauthorized work. 

The House and Senate are 

considering legislation to reform 

immigration laws and strengthen 

their enforcement. There are 

proposals to allow DHS access 

to earnings data to identify

unauthorized workers. To better 

understand how such data could 

be used, the House Ways and 

Means Subcommittee on Social 

Security and the Subcommittee 

on Oversight requested that we 

review how DHS uses earnings 

data that it already receives from 

SSA and consider changes or 

improvements that could be 

made. 

To address the subcommittees’ 

request, we describe the 

earnings data that might be 

useful to DHS in its worksite 

enforcement efforts, highlighting 

both the benefits and the 

limitations associated with each 

source of data. 

We provided a copy of this 

briefing to the Social Security 

Administration, the Internal 

Revenue Service, the 

Department of Homeland 

Security, and the Department of 

Health and Human Services. All 

four agencies provided technical 

comments, which we have 

incorporated as appropriate. 

Access to earnings data maintained by the Social Security Administration and 

by the Internal Revenue Service could help the Department of Homeland 

Security target the limited resources it has for worksite enforcement. A 

variety of databases could help identify potential unauthorized work. Each 

affords information about a segment of the unauthorized workforce. 

Why GAO Did This Study Summary

Table 1: Key Characteristics of Data Sources 

Source Description

Social 

Security

Administration 

Nonwork Alien File 

This file contains earnings and demographic data for over 500,000 individuals 

who earned income using Social Security numbers (SSN) issued for nonwork 

purposes. DHS has estimated that about one-third are work authorized. 

Social 

Security

Administration 

Earnings Suspense File (ESF)

This file contains earnings reports with names and SSNs that do not match 

SSA’s records. Employers submitting large numbers of unmatched reports may

suggest employment of unauthorized workers. However, the file includes much 

information about citizens, including records that are the result of errors, in 

addition to persons using false SSNs or SSNs belonging to others, or persons for 

whom the employer has no SSN. About 8 million to 11 million records are added 

annually, but the number of unauthorized workers is not known. 

Department of 

Health and 

Human 

Services

National Directory of New Hires (NDNH)

This file contains up-to-date reports on new hires and quarterly wages on almost 

all workers, including U.S. citizens, for child support enforcement purposes. Over 

500 million quarterly wage records and over 60 million new hire reports are 

entered yearly. NDNH contains only records with names and SSNs that match

SSA’s records. Names and SSNs that do not match are maintained separately. 

Internal 

Revenue 

Service 

Individual Taxpayer Identification Numbers (ITINs) with Wage Income

IRS could identify taxpayers who filed tax returns using an ITIN and had wage 

income. To be issued an ITIN, an individual must be ineligible for an SSN. About 

530,000 ITIN holders submitted tax returns with wage income in 2001. IRS 

officials believe that almost all returns filed with ITINs claiming wages are from 

unauthorized workers. 

Department of 

Homeland 

Security

Electronic Employment Eligibility Verification Transaction Data 

DHS maintains transaction records of employment eligibility verification queries 

electronically submitted by participating employers. Under the voluntary Basic 

Pilot program, employers made over 900,000 queries in fiscal year 2005. If made 

mandatory, these data could potentially be used for worksite enforcement. 

Although there is potential benefit to sharing the information contained in 

these data sources, they include sensitive personal information, protected by 

various laws and regulations, such as the Privacy Act and the Internal 

Revenue Code. To be useful, each would require additional time and 

resources. In addition, none of the data sources is comprehensive. Each has 

limitations. Some limitations are shared; others are unique to the source. 

Agency Comments 

Briefing Structure 

Background pages 2-3

DHS’s Needs and Priorities page 4

Privacy Legislation page 5

Potential Earnings Data Sources page 6

 Nonwork Alien File page 7 

 Earnings Suspense File page 8 

 National Directory of New Hires page 9 

 Individual Taxpayer Identification Numbers with Wage Income page 10 

 Electronic Employment Eligibility Verification Transaction Data page 11 

Concluding Observations page 12 

Appendix: Scope, Methodology, Contributors page 13
Briefing for Congressional Staff Page 2

Background 

Figure 1: Flow of Earnings Data Collection

Note: State workforce agencies also supply 

information on unemployment insurance to 

NDNH. 

To lawfully work in the United States, individuals are required to provide 

identification and evidence of work authorization to their employers. 

Individuals who are not U.S. citizens must have authorization to work from 

DHS. Information about work authorization is gathered using DHS’s 

Employment Eligibility Verification Form I-9, which requires that employers 

verify the identity and employment eligibility of newly hired workers. DHS is 

testing electronic employment verification through its statutorily mandated 

Basic Pilot program, a voluntary program through which participating 

employers electronically verify newly hired employees’ work eligibility by

checking information maintained in SSA and DHS databases. As of June 2006, 

about 9,300 employers have registered to use the Basic Pilot. Pending 

immigration reform legislation would require mandatory participation in this 

program for all employers. 

Background 

Employers are also obligated to gather and report information about their 

workers to state and federal agencies upon hiring them and periodically 

thereafter. This information is used to administer tax and social security

programs and to enforce child support laws. Information gathered for tax 

withholding purposes is collected on the IRS Form W-4, Employee’s 

Withholding Allowance Certificate. Information on wages paid to workers is 

reported to the SSA annually on the IRS’s Form W-2, Wage and Tax Statement.

Some of this information is also collected for the National Directory of New 

Hires (NDNH), which was created by Congress to assist in establishing and 

enforcing child support orders. Within 20 days after hiring a new worker, 

employers are required to report the name, SSN, and address provided on the 

W-4 to a designated state agency that maintains a state directory of new hires. 

The state, in turn, is required to report this information to the National 

Directory within 3 days of entry into the state directory. Employers also 

submit quarterly wage statements to state workforce agencies, and this 

information is added to the NDNH. Periodic statements on persons who have 

applied for or received unemployment benefits are also supplied to the 

National Directory by state workforce agencies. The Office of Child Support 

Enforcement at the U.S. Department of Health and Human Services maintains 

this directory, and SSA's National Computer Center houses it. 

At the end of the calendar year, employers report wages to SSA using Form 

W-2, and individuals file their income tax returns with IRS using IRS Form 

1040, US Individual Income Tax Return. IRS requires a unique taxpayer 

identification number, such as an SSN, to process any tax return or tax-related 

document. In certain limited situations, SSA issues SSNs to noncitizens for 

nonwork purposes. A 1996 law requires SSA to provide DHS an annual 

electronic file listing persons who have earnings but who were issued an SSN 

for nonwork purposes. Noncitizens that are not eligible to obtain an SSN but

require a taxpayer identification number for tax-processing purposes may

obtain Individual Taxpayer Identification Numbers (ITINs) from IRS. 

Although precise data have not been compiled, Treasury’s Office of the 

Inspector General has estimated that hundreds of thousands of ITINs have 

been issued to noncitizens who may not be authorized to work but 

subsequently earn wage income. 
Briefing for Congressional Staff Page 3

Background 

As SSA posts earnings to workers’ Social Security records through various 

automated processes, reports with names and SSNs that do not match SSA’s 

records and cannot be identified are placed in the Earnings Suspense File 

(ESF), remaining there until they can be linked to a valid SSN and name. In 

the past, we have noted that a small percentage of employers were 

responsible for a disproportionate percentage of the unidentified earnings 

reports. Some records are posted to the ESF when, for example, employers 

use the same SSN for multiple workers in a single tax year, submit invalid 

SSNs, or submit incomplete information. Employers are instructed to enter 

all zeros for the SSN if the worker has applied for a card but the number is not 

received in time for filing. These records, if not changed later, would also be 

posted to the ESF. 

Figure 2: Earnings Data Collection and Reporting

a

 Electronic employment eligibility verification is currently operating as the Basic Pilot program, 

which is voluntary for employers, but under immigration reform bills under consideration, it could 

become mandatory. 
Briefing for Congressional Staff Page 4

DHS’s 

Needs and 

Priorities 

We have reported that consistent

with DHS’s mission to combat 

terrorism, after September 11, 

2001, the department focused its 

worksite enforcement resources 

on removing unauthorized 

workers from critical

infrastructure sectors. As a result, 

worksite enforcement for 

noncritical infrastructure has been

a relatively low priority for DHS. 

For example, the number of

administrative worksite arrests

declined from 2,849 in fiscal year

1999 to 445 in fiscal year 2003. 

Between fiscal years 1999 and 

2003, the percentage of agent

work-years spent on worksite

enforcement efforts generally 

decreased from about 9 percent to

about 4 percent.

Although SSA was required by law 

to provide DHS with an annual 

listing of persons who have 

earnings but who have an SSN 

issued for nonwork purposes, 

DHS has so far made little use of

this information for worksite 

enforcement. According to DHS 

officials, until 2005 the data came

from SSA in an electronic format 

that was incompatible with their 

systems. Although DHS has 

overcome the technical 

impediments, DHS officials

remain concerned that these 

earnings data are outdated and

that many listed individuals may 

have become work authorized. In 

addition, officials said that this 

source may not help DHS agents

prove that employers knowingly 

hired unauthorized workers

because all of the individuals in 

the file have valid name and SSN

combinations. 

While DHS’s worksite enforcement efforts continue to focus mainly on 

detecting unauthorized workers in critical infrastructure sectors, in April 

2006, DHS announced a new interior enforcement strategy to complement 

border security efforts. This strategy expands efforts to target employers of 

unauthorized workers, immigration violators, and criminal networks that 

support illegal immigration and bring criminal charges against them, rather 

than relying on penalizing these employers through use of administrative 

monetary fines. According to DHS, for 2005 DHS increased its worksite 

enforcement efforts, with criminal worksite arrests increasing from 160 in 

2004 to 176 in 2005, and the number of criminal convictions increasing from 

87 to 160 over the same time period. 

Past DHS Enforcement Efforts DHS’s Current Goals and Enforcement Priorities

DHS has proposed increasing agent and support resources by 206 positions 

for all of its worksite enforcement efforts in 2007 to increase investigations of 

employers who hire significant numbers of unauthorized workers. To help 

target such employers and help address SSN abuses that allow unauthorized 

workers to illegally obtain employment, DHS has requested new statutory 

authority to access additional earnings data from SSA. Various immigration 

reform proposals would provide additional resources for enforcement. The

immigration reform bill that the Senate passed in May 2006 provides DHS with 

access to some earnings data for worksite enforcement purposes. 

According to DHS officials, they have not yet fully determined what their 

future data needs under a mandatory electronic employment eligibility 

verification system might be. Regardless of whether or not electronic 

verification becomes mandatory, DHS officials said that access to a list of 

employers who submit large numbers of inaccurate records could be helpful. 

This list would include certain employers who have been sent letters 

indicating that names and SSNs on earnings reports could not be matched to 

SSA records. DHS officials believe that these data could provide investigative 

leads on employers who may be engaged in illegal employment activities. In 

addition, because this dataset includes employers who have been notified of 

such mismatches, it may help agents demonstrate that employers have

knowingly continued to employ unauthorized workers, although they have 

been apprised of such mismatches. 

DHS’s Current Data Needs

DHS officials also told us that they have been analyzing earnings information 

that DHS already receives to determine how this information might best be 

used. For example, DHS is attempting to match the information with other 

databases that contain information on criminal noncitizens. However, they 

have not determined how useful the data might be and are continuing to 

further explore their potential usefulness. 
Briefing for Congressional Staff Page 5

Privacy 

Legislation 

• The Privacy Act of 1974 

regulates the government’s use 

of information by limiting the

collection, disclosure, and use

of personal information 

maintained in agencies’ systems 

of records.

• Internal Revenue Code 

Section 6103, as amended by

the Tax Reform Act of 1976, 

governs sharing of taxpayer

information. The law provides

that tax returns and taxpayer 

information are confidential and 

may not be disclosed or shared 

except under limited 

circumstances. 

• The Computer Matching and 

Privacy Protection Act of

1988 protects personal 

information by requiring 

agencies to enter into written 

agreements, referred to as

matching agreements, when 

they share information 

protected by the Privacy Act of

1974 for the purpose of 

conducting computer matches.

• The E-Government Act of

2002 strives to enhance 

protection for personal 

information in government 

information systems or 

information collections by 

requiring that agencies conduct 

privacy impact assessments. 

Privacy: Key Challenges Facing 

Federal Agencies. GAO-06-777T. 

Washington, D.C.: May 17, 2006. 

Personal Information: Agency and 

Reseller Adherence to Key Privacy 

Principles. GAO-06-421. 

Washington, D.C.: April 4, 2006. 

Advances in information technology make it easier than ever for the federal 

government to obtain and process personal information about citizens and 

resident noncitizens in many ways and for many purposes. Federal agencies 

are increasingly using data sharing to help verify data provided by applicants

for government programs or benefits, or to make eligibility decisions. In some 

cases, data sharing is required by statute. Although such data-sharing 

arrangements can be useful, several laws and regulations govern the 

collection, use, and sharing of individuals’ taxpayer identifying information. 

These laws combine to protect sensitive taxpayer identifying data but also 

provide a structure that allows data to be shared in certain limited instances. 

Privacy-Related Legislation Data-Sharing Concerns 

Increased data-sharing could provide DHS with detailed information to use in 

conducting worksite enforcement. Specifically, various forms of earnings data

may provide leads to assist DHS in identifying unauthorized workers or 

companies participating in fraudulent employment practices. For example, in 

1996 Congress required SSA to share certain earnings information with DHS. 

These arrangements have both benefits and drawbacks. For example, we 

have reported IRS’s concerns that additional disclosure of information in its 

files could affect taxpayers’ willingness to voluntarily comply with tax laws.

Specifically, IRS officials have expressed concerns that if information on 

unauthorized workers is shared with DHS, some unauthorized workers may 

move into underground jobs and avoid their tax obligations. 

As one of the largest repositories of personal information, IRS is often at the 

center of concerns over the sharing of sensitive personal identifying data. 

Because the confidentiality of tax data is considered crucial to voluntary 

taxpayer compliance, IRS is restricted under Section 6103 of the Internal 

Revenue Code from sharing taxpayer information with third parties, including 

other government agencies, except in very limited circumstances. Currently, 

IRS is not authorized to share taxpayers’ information for worksite 

enforcement efforts. However, SSA is authorized to provide DHS a specific 

data file that contains certain information compiled from employer earnings 

reports and SSA data. A statutory exemption to Section 6103 would be 

required for DHS to obtain broad access to taxpayer information. 

Some privacy advocates have expressed concern that expanded sharing of 

some data may conflict with fundamental privacy principles contained in the 

Privacy Act, specifically that data acquired for one purpose may not be used 

for a different purpose without public notification or an individual’s consent. 

Related GAO Reports
Briefing for Congressional Staff Page 6

Potential 

Earnings Data 

Sources 

Nonwork Alien File 

Earnings reports for Social Security

numbers issued for nonwork 

purposes.

Earnings Suspense File 

Earnings reports with names and 

SSNs that do not match SSA’s 

records.

National Directory of New Hires 

Employer reports of all new hires 

and quarterly wages to state

directories of new hires and state 

workforce agencies. 

Individual Taxpayer 

Identification Numbers with 

Earnings from Wages 

Information from tax returns 

submitted by taxpayers who were

not authorized to obtain an SSN, 

were issued an ITIN, and reported

earnings from wages. 

Electronic Employment 

Eligibility Verification 

Transaction Data 

Employment eligibility verification 

queries submitted by employers. 

While each data source can provide useful leads for detecting unauthorized 

work, each source affords information on only a segment of this population. 

There are various ways in which unauthorized workers obtain employment 

without the proper documentation, including 

Potential Data Sources Overview of Earnings Data Sources 

• using a nonwork SSN for work or working after authorization expires; 

• making up an SSN or using another individual’s SSN but not the 

corresponding name; 

• using another person’s valid name and SSN combination; 

• working for cash without an SSN; or 

• using an ITIN as an SSN.

As figure 3 shows, each data source can reveal different types of unauthorized 

work (shown inside the shaded area), but none is comprehensive. A portion of 

unauthorized work, such as work done using someone else’s valid name and 

SSN combination (identity theft) or unreported work, is not easily detected 

using these data. 

Figure 3: Availability of Data on Unauthorized Work in Selected Data Sources

Note: Sizes of circles are not to scale. The chart includes instances of both identity theft and the 

fraudulent use of invalid name/SSN combinations. The use of someone else’s valid name and SSN 

combination (with or without permission) is referred to as identity theft. While other databases may 

contain earnings information for persons using some information belonging to others, such fraudulent

use is easier to detect in these databases because the records may contain someone else’s name or 

SSN, but not both together. 

Because these earnings data were not developed to identify unauthorized 

work, they often lack key enforcement information. As a result, each source 

contains data that are incomplete or outdated. The information in the files can

also be misleading. The mere fact that an earnings report appears in one of 

these files is not necessarily indicative that an unauthorized worker is

associated with the report. Additional investigation would be required to 

determine whether unauthorized work actually occurred. 
Briefing for Congressional Staff Page 7

Potential 

Earnings Data 

Sources 

Description 

Earnings reports for persons issued

SSNs for nonwork purposes. 

Responsible Agency 

SSA. 

Information Sources 

Employer reports (W-2) and income

tax returns (1040) for self-employed

are supplemented with demographic 

information on each SSN holder. 

Persons Included 

Persons issued nonwork SSNs, who

have reported earnings. Includes

some persons who are authorized to

work but have not changed their

work status in SSA’s records. 

Information Included 

Worker’s name, SSN, address, other 

identifying information; employer, 

employer identification number, 

employer’s address, earnings 

amounts.

Size 

Over 500,000 unique SSNs per year. 

Time Frame 

Provided yearly to DHS about 13

months after end of the tax year.

Social Security Numbers: 

Coordinated Approach to SSN Data 

Could Help Reduce Unauthorized 

Work. GAO-06-458T. Washington, 

D.C.: February 16, 2006. 

Social Security: Better 

Coordination among Federal

Agencies Could Reduce 

Unidentified Earnings Reports.

GAO-05-154. Washington, D.C.: 

February 4, 2005. 

Immigration Enforcement: 

Weaknesses Hinder Employment 

Verification and Worksite

Enforcement Efforts. GAO-05-813. 

Washington, D.C.: August 31, 2005. 

SSA’s Nonwork Alien File can be used to identify persons who have SSNs that 

were issued for nonwork purposes but have earnings. Since 1982, when SSA 

began issuing cards indicating they are not valid for employment, SSA has 

issued over 7 million individuals an SSN for nonwork purposes, and over 

500,000 of these persons have earnings posted in the file each year. Since 

2002, the number of SSNs issued for nonwork purposes has fallen to 15,000 

per year. Although SSA is required by a 1996 statute to provide DHS access to

this file annually, DHS has so far made limited use of this information. DHS 

officials told us they did not have the ability to read the information until 2005

and they are uncertain the data are useful for law enforcement purposes. 

Because some of SSA’s information on immigration status is outdated, the file 

currently includes a significant number of individuals who received work 

authorization but have not corrected their SSA record. If supplemented with 

more up-to-date information on immigration status from DHS, the Nonwork 

Alien File could be made more useful for worksite enforcement purposes. 

Potential Benefits 

Features Nonwork Alien File

• The file is narrowly targeted. It includes information about workers who 

have been issued nonwork SSNs but are working. 

• DHS could focus on employers with large numbers of records or on 

individual workers. 

• The file is produced using records from one tax year, which allows DHS to 

focus on persons working in the most recent tax year. 

• SSA has statutory authority to share this information with DHS. 

Potential Limitations 

• Immigration status is not up to date, as work authorization status of many 

listed individuals may have changed since obtaining their nonwork SSNs. 

On the basis of two samples—one random, one judgmental—and 

transaction data from the electronic employment eligibility verification 

system, DHS has estimated that approximately one-third of the persons in 

the file have become work authorized. Updating immigration status in the 

SSA database is challenging because of the lack of a common identifier 

between SSA and DHS databases. 

Related GAO Reports

• Form W-2 data filed with SSA and Form 1040-series returns filed with IRS 

are generally not submitted until after the close of the year, and undergo 

another year of processing before being shared with DHS. 

• DHS officials believe that this source may not help prove that employers 

knowingly hired unauthorized workers because the individuals in the file 

have valid name and SSN combinations. 

• The file would not include workers using fictitious SSNs or name and SSN 

combinations that do not match SSA’s data because the file was created to 

identify only persons known to have been issued nonwork numbers. 

• Employers’ addresses from W-2 reports cannot always be used to 

determine whether certain individuals are working at specific worksites 

or to identify suspicious patterns based on worksites, as addresses are not 

necessarily worksite specific. DHS officials acknowledged this limitation, 

but still believed that use could be made of these data.

• Includes sensitive taxpayer information—1996 statue provides DHS 

access to this file annually. 
Briefing for Congressional Staff Page 8

Potential 

Earnings Data 

Sources 

Description 

Earnings reports with names and 

SSNs that do not match SSA’s 

records.

Responsible Agency 

SSA.

Information Source 

Employer reports (W-2). 

Persons Included 

Persons whose names are 

inconsistent with SSA’s records due 

to errors or obsolete data; persons

using false SSNs or SSNs belonging

to others with an incorrect name;

and persons for whom the employer

has no SSN. 

Information Included 

Worker’s name, SSN; employer’s 

identification number, and earnings 

amount. 

Size 

255 million records as of 2005. In 

recent years, 8 million to 11 million 

new records have been added per

year. 

Time Frame 

Cumulative from 1937. 

Processing is finished 21-22 months 

after the end of the tax year. 

Social Security: Better 

Coordination among Federal

Agencies Could Reduce 

Unidentified Earnings Reports.

GAO-05-154. Washington, D.C.: 

February 4, 2005. 

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 31, 2004. 

SSA’s Earnings Suspense File is a large, cumulative file that could be used to 

identify employers who consistently submit large numbers or percentages of 

invalid name and SSN combinations, an indication that they may be 

disregarding laws. Because, by definition, the records in the file cannot be 

assigned to an individual’s Social Security record, the portion of these 

earnings that represent unauthorized work is unknown. Reinstatements, 

which are previously unidentified records from the ESF that are later credited

or “reinstated” to an individual’s Social Security record, provide some 

indication of the types of persons whose records are in the ESF. The number 

of reinstatements to probable unauthorized workers is growing, but our prior 

work has shown that most reinstatements are still made to U.S.-born citizens. 

This is an indication that a significant number of earnings reports in the ESF 

still belong to U.S. citizens and work-authorized noncitizens. DHS is seeking 

access to a list of employers sent ‘‘no match’’ letters indicating a certain 

number of names and SSNs on earnings reports submitted could not be 

matched to SSA records. In one of many efforts to match earnings 

information to individual records, SSA sends letters to employers who submit 

a wage report containing more than 10 Forms W-2 that SSA cannot process 

and in which the mismatches represent more than 0.5 percent of the total 

Forms W-2 in the employer’s submitted wage report. 

Features Earnings Suspense File 

Potential Benefits 

• Could allow DHS to focus on employers who appear most likely to be 

disregarding the laws—records in the ESF could be the result of SSN 

misuse or unauthorized work activities, such as hiring persons with no 

SSN, fictitious SSNs, or SSN and name combinations that do not match 

SSA’s records. 

• Provides historical information—allows DHS to focus on employers who 

repeatedly submit large numbers of unmatched reports year after year. 

Potential Limitations 

• Does not contain information about immigration status. 

• Contains information about many U.S. citizens as well as noncitizens—the 

overall percentage of unauthorized workers is unknown. 

• Contains information on persons whose information does not match SSA’s 

records, sometimes for unintentional reasons. 

Related GAO Reports

• Employers are instructed to submit earnings reports using all zeros if an 

individual’s SSN is not available. 

• Employers’ addresses are not included once the earnings report is posted 

to the ESF, but could potentially be added. 

• Listing employers by number of records in file could be misleading. For 

example, an employer with 35 different employer identification numbers 

in more than 10 states may appear lower on a list of employers by number 

of records in the file than an employer with fewer identification numbers. 

• Includes sensitive taxpayer information that is protected by various laws 

and regulations—requires statutory authority to provide DHS access. 
Briefing for Congressional Staff Page 9

Potential 

Earnings Data 

Sources 

Related GAO Reports

Description 

Employers report all new hires and 

quarterly wages to state new hire

directories and workforce agencies. 

Responsible Agency 

Office of Child Support 

Enforcement, Department of Health 

and Human Services. 

Information Sources 

W-4 information, quarterly wage

reports, and state unemployment

insurance records. 

Persons Included 

Persons whose name and SSN

match SSA’s records. 

Information Included 

Worker’s name, SSN, address; 

employer, employer’s identification 

number, address; quarterly wages

unemployment insurance receipt. 

Size 

Over 500 million quarterly wage

reports and over 60 million new hire

reports annually. 

Time Frame 

Updated continuously—earnings 

reports added quarterly.

Improper Payments: Federal and 

State Coordination Needed to 

Report National Improper Payment 

Estimates on Federal Programs.

GAO-06-347. Washington, D.C.: 

April 14, 2006. 

Disability Insurance: SSA Should 

Strengthen Its Efforts to Detect and 

Prevent Overpayments. 

GAO-04-929. Washington, D.C.: 

September 10, 2004. 

Unemployment Insurance:

Increased Focus on Program 

Integrity Could Reduce Billions in 

Overpayments. GAO-02-697. 

Washington, D.C.: July 12, 2002. 

The Department of Health and Human Services’ National Directory of New 

Hires contains more up-to-date employment information than the other data 

sources and could be used to supplement the Nonwork Alien File by providing 

more recent earnings and employment information. However, because it does

not contain information on work authorization status, supplemental 

information would be required to make the NDNH useful for identifying 

unauthorized work. SSA’s records contain information related to citizenship 

and work authorization status, but we have previously reported that SSA’s 

information on work authorization status is not up to date. Since its creation, 

Congress has authorized use of NDNH data by certain other federal and state 

agencies for specific purposes other than child support. For example, the 

Department of Education uses the data to locate persons delinquent in their 

student loan payments. State workforce agencies have access to determine 

whether unemployment insurance beneficiaries are working. IRS has access 

to the NDNH to verify a claim of employment in a tax return and to verify 

claims for the Earned Income Tax Credit. SSA has access to help it administer 

its Supplemental Security Insurance and Old-Age, Survivors, and Disability 

Insurance programs.

Features National Directory of New Hires 

Potential Benefits 

• The database includes employer reports of hiring, if the name and SSN 

match SSA’s records, and wages paid to most workers. Names and SSNs 

that do not match SSA’s records are maintained in a separate file, similar 

to SSA’s ESF. 

• The database includes information that is much more current than 

information in other databases—earnings based on quarterly wage files, 

which may be only a few months old. 

Potential Limitations 

• Does not contain information about immigration status and cannot be 

used alone for immigration enforcement purposes. The file would need 

supplemental data to be useful for identifying unauthorized work, but 

supplementing data with up-to-date DHS immigration status would be 

challenging. SSA’s work authorization data could be added, but these data 

are not up-to-date. 

• Employers’ addresses from W-4 records cannot always be used to 

determine whether certain individuals are working at specific worksites 

or to identify suspicious patterns based on worksite, as addresses are not 

necessarily worksite specific. Although DHS has not seen the NDNH data, 

DHS officials acknowledged this limitation of employer addresses in 

general and believed that use could be made of earnings data containing 

employers’ addresses. 

• Includes sensitive information that is protected by statute—requires 

statutory authority to provide DHS access. 
Briefing for Congressional Staff Page 10

Potential 

Earnings Data 

Sources 

Related GAO Reports 

Description

Information from tax returns 

submitted by ITIN holders with 

reported wages. 

Responsible Agency

IRS. 

Information Source 

Annual income tax returns.

Persons Included 

Persons who have been issued an 

ITIN and submit a tax return

claiming wage income. 

Information Included 

Worker’s name, address, and 

earnings in the last tax year. 

Size 

About 530,000 in tax year 2001. 

Time Frame 

Yearly income tax returns. Initial 

processing is finished 6 months after 

the end of the tax year. 

Internal Revenue Service: 

Individual Taxpayer Identification 

Numbers Can Be Improperly 

Obtained and Used. 

GAO-04-529T. Washington, D.C.: 

March 10, 2004. 

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 31, 2004. 

Taxpayer Information: Options 

Exist to Enable Data Sharing

between IRS and USCIS, but Each 

Presents Challenges. GAO-06-100. 

Washington, D.C.: October 11, 2005. 

Income tax returns filed using Individual Taxpayer Identification Numbers 

that report wage income could provide a targeted list of unauthorized 

workers. Although precise data have not been compiled, hundreds of 

thousands of aliens with ITINs earn wage income. In March 2004, we reported 

that IRS and the Treasury Inspector General for Tax Administration have 

concluded that most of the taxpayers who file tax returns with ITINs are 

unauthorized workers. Because such a list could be compiled only from 

individual income tax returns, using this information for enforcement could 

provide a disincentive to comply with income tax filing requirements. 

Features Individual Taxpayer Identification Numbers with Wage Income 

Table 2: Characteristics of Tax Returns Filed Using ITINs and Reporting Wages 

Category Tax year 2000 Tax year 2001 % change

Individual income tax returns (Form 1040) 353,000 530,000 50%

Paper filed Forms 1040 309,000 444,000 44%

Electronically fileda Forms 1040 44,000 86,000 95%

Source: Treasury Inspector General for Tax Administration

a

 According to IRS officials, IRS does not accept Forms 1040 filed electronically if the SSN on the W-2

does not match the SSN on the 1040 (in this case, the ITIN on the 1040). The Treasury Inspector 

General for Tax Administration reported that some individuals and tax preparation programs were

replacing the SSN on the W-2 with the ITIN. 

Potential Benefits 

• ITINs are issued only to individuals unable to obtain an SSN, but who 

need a taxpayer identification number for tax purposes. Such persons are 

generally not eligible to work in the United States. 

• Although estimates are not precise, the Treasury Inspector General for 

Tax Administration has concluded that hundreds of thousands of tax 

returns filed with ITINs each year likely involve unauthorized workers. 

• IRS officials believe that almost all ITIN holders whose wages are 

reported on Form W-2 are improperly using fabricated SSNs or SSNs 

belonging to other people. 

Potential Limitations 

• IRS does not regularly generate a listing of ITIN holders with earnings. 

• Data are not current, as information is derived from income tax returns. 

• Information on employer names and addresses is not readily available to 

be included, as these items are not collected during processing of tax 

returns. If employer addresses were collected, these cannot always be

used to target specific worksites, as addresses are not necessarily

worksite specific. Although DHS has not seen the ITIN data, DHS officials 

acknowledged this limitation of employer addresses in general, and 

believed that use could be made of employer addresses. 

• Offers information on the segment of the unauthorized workforce that 

files tax returns. Confidentiality of tax data is considered to be 

fundamental to taxpayers’ willingness to report their tax obligations 

accurately. To the extent that ITIN holders become aware of greater 

sharing of information by IRS with other agencies, some of them may

move into underground jobs and avoid their tax obligations. 

• Includes sensitive taxpayer information that is protected by various laws 

and regulations—requires statutory authority to provide DHS access. 
Briefing for Congressional Staff Page 11

Potential 

Earnings Data 

Sources 

Description 

Employment eligibility verification 

queries submitted by participating 

employers. 

Responsible Agencies

DHS and SSA.

Information Source 

Employer submissions based on

information from Form I-9. 

Persons included 

Currently, persons whose employers 

participated in the Basic Pilot 

program. If the program becomes 

mandatory, all workers whose 

employers are required to 

participate.

Information Included 

Worker’s name, SSN, date of birth,

citizenship status, hire date, Alien 

Number (if applicable), employer,

and status of query. 

Size 

As of June 2006, about 9,300 

employers have registered for the 

program, and those employers who

actively used the program submitted 

over 900,000 queries in fiscal year 

2005. If it became mandatory, 5 

million to 6 million employers would 

be required to participate. 

Time Frame 

Employer submissions are ongoing 

Immigration Enforcement: 

Weaknesses Hinder Employment 

Verification and Worksite

Enforcement Efforts. GAO-05-813. 

Washington, D.C.: August 31, 2005. 

Immigration Enforcement: 

Preliminary Observations on 

Employment Verification and 

Worksite Enforcement 

Efforts. GAO-05-822T. Washington, 

D.C.: June 21, 2005. 

Transaction data from employer queries of an electronic employment 

eligibility verification system could be mined for patterns suggesting 

unauthorized work. Under the current voluntary Basic Pilot program, 

transaction data are rarely shared with enforcement agents. If the program 

remains voluntary and the data are used for worksite enforcement purposes, 

U.S. Citizenship and Immigration Services officials are concerned that such 

use could create a disincentive for employers to participate. If electronic 

verification becomes mandatory, the transaction data could provide more 

comprehensive information that is potentially more useful for worksite 

enforcement. 

Features Electronic Employment Eligibility Verification Transaction Data 

Potential Benefits 

• Patterns suggesting unauthorized work could be detected in employer 

queries. For example, employers submitting the same name and SSN 

multiple times or many employers submitting the same name and SSN. 

• Use of transaction data could limit the ability of employers who 

knowingly hired unauthorized workers to claim that the workers 

presented false documents to obtain employment, assisting DHS’s 

Immigration and Customs Enforcement agents in proving that employers 

knowingly hired unauthorized workers.

Potential Limitations 

• Although the potential impact of mandatory electronic employment 

eligibility verification on identity fraud is not clear, as it becomes more 

difficult for undocumented workers to find work without a name and SSN 

that match DHS’s and SSA’s records, there could be an increase in 

identity fraud. 

• To ensure that all employers have registered to use the mandatory system, 

DHS would need a listing of all employers. One version of proposed 

legislation requires that SSA provide DHS a listing of all employers who 

have not registered to participate in electronic employment eligibility 

verification but have submitted earnings reports. 

• Investigative resources are needed to follow up on worksite leads, and 

these resources may not be available in appropriate numbers once 

electronic verification becomes mandatory. 

• Query patterns that appear to suggest unauthorized work can be 

misleading. For example, one suggestion for using the Basic Pilot 

transaction data was to detect potential cases of identity fraud by 

investigating instances suggesting fraudulent use of SSNs. One pattern 

that suggests unauthorized work is the submission of the same SSN by 

multiple employers. However, there might be valid reasons, including one 

person holding multiple part-time jobs at the same time or one person 

holding multiple jobs sequentially—like a transient construction worker. 

SSA officials gave us examples of longshoremen or construction workers 

bringing in stacks of W-2s for 1 year when applying for retirement 

benefits. DHS officials acknowledged this limitation, but stated that they 

would likely use the data only when the number of multiple uses was 

significant. This limitation could also be resolved by requiring workers to 

provide additional information to establish identity. 

Related GAO Reports 
Briefing for Congressional Staff Page 12

Concluding 

Observations 

It is DHS’s responsibility to enforce the nation’s immigration laws. SSA, IRS, 

HHS, and DHS collect a wealth of earnings data, work authorization data, or 

both that could be mined to help detect unauthorized work and enforce 

immigration laws. These data are potentially useful whether or not 

immigration reform is enacted. If mandatory electronic employment 

verification is enacted, earnings data may be useful to determine whether 

employers are complying with verification requirements. Each data source

presents both benefits and limitations, and their usefulness to DHS is not yet 

entirely clear. DHS officials believe that information from the Earnings 

Suspense File might be more useful for identifying employers of unauthorized 

workers than the information it currently receives, but no one data source 

provides a full picture of unauthorized work. 

Concluding Observations

While our prior work notes the benefits of earnings information for detecting 

unauthorized work, additional disclosure of earnings information should be 

carefully weighed against the various drawbacks—especially privacy 

considerations. All of the data sources have information that could potentially 

provide false leads. IRS has expressed concerns that additional disclosure of 

sensitive taxpayer data could affect taxpayers’ willingness to voluntarily 

comply with tax laws. All of the files contain sensitive personal information, 

including information on U.S. citizens. Providing earnings data to DHS could 

involve divulging information about hundreds of thousands or even millions of

U.S. citizens and work-authorized aliens. 

Data-sharing has potential to assist DHS in detecting unauthorized work and 

enforcing immigration laws, but as Congress considers providing DHS 

additional earnings data, it might consider how DHS will use particular data 

elements in a program of general worksite enforcement. Specifically, 

policymakers might also usefully consider the following questions: 

• What information does DHS believe would be most useful? 

• How would DHS use these data in a program of general worksite 

enforcement?

• What steps would DHS take to safeguard personal information and 

protect it from misuse? 

• Would DHS require entire earnings files or could SSA or IRS provide 

some limited, well-defined subset of information from the files? 

• Is information from one file sufficient, or would information from

multiple files provide more comprehensive information? 

• Would it be beneficial to provide the information on a trial basis for 

evaluation purposes? 

• Given its limited resources, how useful might data with high potential 

for false leads be to DHS? 

• Do the benefits of identifying potential unauthorized workers 

outweigh the costs of potentially decreased employer compliance with 

reporting requirements and loss of privacy for U.S. citizens? 

• To what extent, if any, would additional data sharing be needed if 

mandatory electronic employment verification is enacted? 
Briefing for Congressional Staff Page 13

Appendix 

Contributors Scope and Methodology 

If you have any questions 

concerning this briefing, please call 

Barbara Bovbjerg, Director,

Education, Workforce, and Income

Security Issues, at (202) 512-7215; 

Michael Brostek, Director, Tax

Issues, Strategic Issues Team, 

(202) 512-9110; or Richard Stana, 

Director, Homeland Security and 

Justice Issues, at (202) 512-8777. 

Other key contributors to this report 

were Blake Ainsworth, Lara Laufer,

Jeff Bernstein, Susan Bernstein,

Rebecca Gambler, and Paul Wright. 

 

To provide information about potential uses of earnings data in DHS’s 

worksite enforcement efforts, we gathered information from SSA, IRS, DHS, 

HHS, and past GAO work on the datasets that might provide information on 

employers hiring unauthorized workers. Building on work by the SSA Office 

of the Inspector General and DHS, we assessed past and potential uses of 

these datasets. To determine what information is most useful to DHS, we 

interviewed DHS officials to understand what they hoped to obtain from 

various files and how this information would serve enforcement priorities. We

also obtained SSA’s and IRS’s perspectives on the feasibility of various 

options. We used this information and our analyses of the datasets to assess

what specific sources would provide the most useful information consistent 

with DHS’s needs and priorities. To understand how DHS could use the data

effectively, we interviewed DHS officials about their experiences with files 

they have access to, the barriers DHS might face in using other files, and 

specific technical or resource requirements that may help or hinder this effort. 

We also discussed what, if anything, could be done to change either the 

process for sharing earnings data or the specific content of the file itself to 

make it a more effective tool for DHS’s enforcement priorities and limited 

worksite enforcement resources. To understand how statutory prohibitions 

on sharing sensitive taxpayer information are appropriately addressed, we 

worked with our counsel and relevant agency counsel. 

We examined five datasets: SSA’s Nonwork Alien File, SSA’s Earnings 

Suspense File, HHS’s National Directory of New Hires, IRS’s information on 

income tax returns reporting wage income filed using Individual Taxpayer 

Identification Numbers, and DHS’s current electronic employment eligibility 

verification program transaction data—collected in the voluntary Basic Pilot 

program. We used prior GAO work, reviewed technical documents, and 

interviewed agency officials about these files’ technical content and the 

feasibility of using this information to target enforcement. 

Because of time constraints, we did not determine the amount of additional 

time and resources DHS would have to invest in order to make these sources

useful. Further, we did not determine the extent to which these databases 

actually contain information about unauthorized work. However, we 

interviewed knowledgeable officials about the contents of these files. 

We performed our work between October 2005 and June 2006 in accordance 

with generally accepted government auditing standards. 
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