Card not required
Physical examination of the social security card is not required.
Form 8867 can be completed with information provided by the taxpayer or reasonably obtained by you. See page 4, line 20, of the official IRS version of the form.
There is absolutely nothing in that form or in the IRC that requires us to examine identification documents of our clients.
It might be a good idea in some cases. But it is not required as a matter of routine.
The meaning of due diligence is going to vary with individual facts and circumstances. My software, for example, asks if the taxpayer is a US citizen. If the answer is no, there are other choices: resident alien with a green card, resident alien by the substantial presence test, or nonresident alien.
If a client represents to me that they are a US citizen, I think it is reasonable to infer that their social security card does not say "not valid for employment."
FYI: There is no law that requires anyone, at any time or for any purpose, to obtain a social security card or to have such a card in their possession. It is certainly true that under IRS regulations, you must have an SSN or ITIN in order to file a return, claim a dependent, etc. But the requirement is that you must have and you must provide a social security number. There is no requirement that anyone have, carry or produce a card.
Today I met with a guy who was 40 years old, and he had what may have been his original social security card, issued shortly after he was born. Those of you who are over the age of 40 or so probably know what's coming next.
At the bottom of the card it says:
"For tax purposes only. Not for identification."
There is a photo of one of these old cards in the most recent edition of Newsweek. It's part of a graphic that accompanies an article by Allan Sloan on social security. The image of the card is partially obscured by a band-aid. But you can still see the text I'm referring to.
Social security cards were never meant to be used as identification documents. They were meant to provide a record of the social security account number to the account holder. They serve a purpose similar to that of a library card or an auto insurance card.
If I visit the library and I don't have my card with me, I simply show my driver's license.
If I get stopped for speeding and can't find my insurance card... yeah, it might be a hassle, and I might have to mail something to the BMV, or appear in court, but I can produce a copy of the policy to show that I have insurance. And even that doesn't really prove anything. The policy could be cancelled, and the cop would never know it.
Not only are you not required to have a social security card, you might be prohibited from getting one in some cases. There's a new law that limits the number of replacement cards you can get. No, I don't have the citation handy. But I'm not making this up.
The card is not meant to be carried around, and it isn't an identification document. Tax pros have relatively low exposure. But anyone else, such as schools, hospitals, police officers, landlords... anyone else who demands that a person produce the card is running a serious risk of some form of litigation or violation of other laws or regulations.
Asking a client if the card is "not valid for employment," or as I noted earlier, asking if they are a US citizen and getting a yes answer should be sufficient in most cases.
For those who really believe we have to see the card:
Are you going to start requesting school or medical records to confirm that the child lived with the taxpayer for more than half the year? Do you demand the birth certificate to verify that the relationship test is met?
Your job is to collect information--not verify it. Due diligence really only becomes a serious issue when there are obvious red flags, or when the client provides conflicting information.
Some years ago, we had a client in my office who had claimed his girlfriend's kid as a dependent under the rules in effect in 2003. Back then you could have the kid as a dependent under the vague definition of a foster child for dependency, but not for EIC.
A few days after we filed the return, he came back in, very belligerent and confrontational, demanding that we explain why we had not allowed him to claim EIC. We explained it to him several times, in several different ways. He couldn't get past the fact that some other tax pro had told him that he could. He finally left, still fuming.
The guy came back a few days later, still royally pissed off, and changed his story:
The child's mother was actually his sister. (When we did the return, the kid was his girlfriend's kid.)
I work in a storefront practice with multiple offices. This particular office had a lot of different people working that year during the peak of the season. Some were new tax pros, and one or two spoke English as their second language. His claim that we had somehow garbled the information when we did the return, under other circumstances, might have been a real possibility, albeit far-fetched.
But under these circumstances, it was clear to me that the guy had figured out how the relationship test worked, and was trying to change the facts so he could claim EIC for the kid. My office manager had a hard time keeping a straight face. A week earlier, the guy was arguing about how close the relationship was between him and the kid's mother, and how he's like a father to the kid, and now... well, now, the woman whom he had earlier identified as his sexual partner was now his sister. It was a hoot, at least for everyone except the client, who had probably already spent the EIC refund that he wasn't getting.
He wanted us to prepare an amended return.
I told him that in order to do so, we would need documentation of the relationships he was describing. He asked me what kind of documentation, and I told him.
I told him we would need to see birth certificates for him, for his sister, and for the child.
He said he would bring them in.
And we never heard from him again.
That's due diligence.
Demanding that the client produce a social security card when you are looking at a Form W-2 from the Department of Defense is not due diligence. It's an insult.
Burton M. Koss
Physical examination of the social security card is not required.
Form 8867 can be completed with information provided by the taxpayer or reasonably obtained by you. See page 4, line 20, of the official IRS version of the form.
There is absolutely nothing in that form or in the IRC that requires us to examine identification documents of our clients.
It might be a good idea in some cases. But it is not required as a matter of routine.
The meaning of due diligence is going to vary with individual facts and circumstances. My software, for example, asks if the taxpayer is a US citizen. If the answer is no, there are other choices: resident alien with a green card, resident alien by the substantial presence test, or nonresident alien.
If a client represents to me that they are a US citizen, I think it is reasonable to infer that their social security card does not say "not valid for employment."
FYI: There is no law that requires anyone, at any time or for any purpose, to obtain a social security card or to have such a card in their possession. It is certainly true that under IRS regulations, you must have an SSN or ITIN in order to file a return, claim a dependent, etc. But the requirement is that you must have and you must provide a social security number. There is no requirement that anyone have, carry or produce a card.
Today I met with a guy who was 40 years old, and he had what may have been his original social security card, issued shortly after he was born. Those of you who are over the age of 40 or so probably know what's coming next.
At the bottom of the card it says:
"For tax purposes only. Not for identification."
There is a photo of one of these old cards in the most recent edition of Newsweek. It's part of a graphic that accompanies an article by Allan Sloan on social security. The image of the card is partially obscured by a band-aid. But you can still see the text I'm referring to.
Social security cards were never meant to be used as identification documents. They were meant to provide a record of the social security account number to the account holder. They serve a purpose similar to that of a library card or an auto insurance card.
If I visit the library and I don't have my card with me, I simply show my driver's license.
If I get stopped for speeding and can't find my insurance card... yeah, it might be a hassle, and I might have to mail something to the BMV, or appear in court, but I can produce a copy of the policy to show that I have insurance. And even that doesn't really prove anything. The policy could be cancelled, and the cop would never know it.
Not only are you not required to have a social security card, you might be prohibited from getting one in some cases. There's a new law that limits the number of replacement cards you can get. No, I don't have the citation handy. But I'm not making this up.
The card is not meant to be carried around, and it isn't an identification document. Tax pros have relatively low exposure. But anyone else, such as schools, hospitals, police officers, landlords... anyone else who demands that a person produce the card is running a serious risk of some form of litigation or violation of other laws or regulations.
Asking a client if the card is "not valid for employment," or as I noted earlier, asking if they are a US citizen and getting a yes answer should be sufficient in most cases.
For those who really believe we have to see the card:
Are you going to start requesting school or medical records to confirm that the child lived with the taxpayer for more than half the year? Do you demand the birth certificate to verify that the relationship test is met?
Your job is to collect information--not verify it. Due diligence really only becomes a serious issue when there are obvious red flags, or when the client provides conflicting information.
Some years ago, we had a client in my office who had claimed his girlfriend's kid as a dependent under the rules in effect in 2003. Back then you could have the kid as a dependent under the vague definition of a foster child for dependency, but not for EIC.
A few days after we filed the return, he came back in, very belligerent and confrontational, demanding that we explain why we had not allowed him to claim EIC. We explained it to him several times, in several different ways. He couldn't get past the fact that some other tax pro had told him that he could. He finally left, still fuming.
The guy came back a few days later, still royally pissed off, and changed his story:
The child's mother was actually his sister. (When we did the return, the kid was his girlfriend's kid.)
I work in a storefront practice with multiple offices. This particular office had a lot of different people working that year during the peak of the season. Some were new tax pros, and one or two spoke English as their second language. His claim that we had somehow garbled the information when we did the return, under other circumstances, might have been a real possibility, albeit far-fetched.
But under these circumstances, it was clear to me that the guy had figured out how the relationship test worked, and was trying to change the facts so he could claim EIC for the kid. My office manager had a hard time keeping a straight face. A week earlier, the guy was arguing about how close the relationship was between him and the kid's mother, and how he's like a father to the kid, and now... well, now, the woman whom he had earlier identified as his sexual partner was now his sister. It was a hoot, at least for everyone except the client, who had probably already spent the EIC refund that he wasn't getting.
He wanted us to prepare an amended return.
I told him that in order to do so, we would need documentation of the relationships he was describing. He asked me what kind of documentation, and I told him.
I told him we would need to see birth certificates for him, for his sister, and for the child.
He said he would bring them in.
And we never heard from him again.
That's due diligence.
Demanding that the client produce a social security card when you are looking at a Form W-2 from the Department of Defense is not due diligence. It's an insult.
Burton M. Koss
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