Bust This State, Mr. President

When he signed the Homeland Security funding bill last week, President Bush vowed to track down illegal aliens inside the U.S. and enforce the law against employers who hire them.

“If somebody’s here illegally, we’ve got to do everything we can to find them,” said Bush. “We’ve got to crack down on employers who flout our laws.”

Well, I have two pieces of information the President might find useful.  The first is that I know where he can get excellent intelligence that could help DHS agents simultaneously find a great many illegal aliens and crack down on employers flouting the law.  The second is that if DHS uses this information it may well end up busting a state government for hiring illegal aliens.

The information is now in the possession of the Social Security Administration (SSA), which believes it is legally prevented from sharing it with DHS other than in the context of an ongoing criminal investigation. 

Specifically, SSA has two lists.  First, according to the SSA Inspector General, SSA develops a list each year of all employers who submit 100 or more W-2 forms–reporting the wages they have paid to their workers–that SSA cannot credit to known taxpayers because the Social Security Numbers on the W-2s are fake or don’t belong to the person named on the form.

Secondly, the IG completed a more elite list in October 2004.  It ranks the Top 100 employers who filed the largest number of bad W-2s from 1997-2001.  The publicly released version of this list does not name the employers, identifying them only by state, number of bad W-2s they filed and other payroll data.

These two SSA lists would be a gold mine for DHS agents assigned to worksite enforcement of the immigration laws because bad W-2s tend to be filed on behalf of illegal alien workers.  Indeed, as then-SSA Inspector General James G. Huse Jr. told a House subcommittee in 2002 “illegal work is the primary cause” of these bad W-2s.

Here’s why I suspect DHS might end up busting a state government for flouting the immigration law if it is given these lists: The October 2004 IG report said a state government agency was one of the Top 100 filers of bad W-2s.  “Forty-three of the Top 100 employers were in the service industry, 32 were in the restaurant industry, and 20 employers were in the agriculture industry,” reported the IG.  “Four of the remaining employers were in the hotel/retail industry, and one was a State agency.”

This means a state agency habitually sent the federal government large numbers of bad W-2s.  In fact, the No. 1 employer on the list submitted 131,991 bad W-2s over five years.  The No. 100 employer filed 12,951.  The state agency, in other words, had to file at least 12,951.

To which state does this agency belong?  The Top 100 included employers in 27 states.   California led with 25.  President Bush’s Texas placed second with 15.  Illinois placed third with 14.  Florida and Ohio tied for fourth with 4.

But when I asked the IG’s office to name the state government whose agency made the list, it refused.  The Internal Revenue Code, I was told, prohibits SSA from publicly releasing the names of employers who file bad W-2s, even if it is a state government.  SSA cannot reveal the names even to DHS, the IG’s office said, except in the context of an ongoing criminal investigation.

“The State location and name of the State agency is protected under Section 6103 of the Internal Revenue Code,” the IG’s office said in written responses to my inquiries.  “With the exception of an ongoing criminal investigation, the same disclosure restrictions under Section 6103 of the Internal Revenue Code apply to sharing this information with outside parties, such as DHS.”

As far back as 2001, the IG recommended SSA take action to deal with this problem.  “[W]e recommended that SSA re-evaluate the application of existing disclosure laws or seek legislative authority to remove barriers that would allow SSA to share information regarding chronic problem employers with other Federal agencies such as DHS,” said the IG’s office. But it has not been done.

Taxpayers have a right to know if their state government is filing large numbers of bad W-2s.  Stockholders have a right to know if companies they invest in are filing large numbers of bad W-2s.  All Americans deserve a secure border.

If President Bush is serious about worksite enforcement of the immigration laws–and about corporate responsibility and about safeguarding the Social Security system–he will ask Congress to change the law so SSA can reveal to the public and to Homeland Security which U.S. employers habitually file large numbers of bad W-2s.