Social Security Number (SSN)

What Is a Social Security Number (SSN)?

A Social Security number (SSN) is a unique ID assigned by the Social Security Administration (SSA) to US citizens and other residents. Linked to a person’s SSA account, an SSN is used to help accurately identify and record Social Security wages (employee and/or self-employment earnings) and determine benefits eligibility.

How Are Social Security Numbers Assigned?

Today’s SSNs are randomly assigned, but older numbers follow a different system. Until 2011 when SSN randomization went into effect, portions of the number held a particular significance. Randomly issuing SSNs helps better protect the security of a person’s identity and allows the SSA to extend the lifespan of the current system.

Social Security Number Formula

A Social Security number consists of nine digits, which are divided by a hyphen into three parts (e.g. XXX-XX-XXXX). Here’s a breakdown of the SSN formula as it was originally designed:

• Area number: These first three digits indicated each state’s or territory’s area number (with several exceptions).
• Group number: The middle two digits were used to indicate the groups of numbers assigned to a state’s post offices.
• Serial number: The last four digits represent a numerical series within each group.

Who Can Legally Ask for a Social Security Number?

Government agencies and private businesses may ask for your Social Security number in several scenarios. However, you can inquire as to how it will be used and whether it’s required by law or voluntary to submit your SSN. In some cases, you may be allowed to provide alternate forms of identification, such as a passport, driver’s license, or Employer Identification Number (EIN).

Government Agencies

An SSN serves as a key identifier for federal, state, and local government agencies. For instance, the following entities possess the legal right to ask for your SSN:

• Departments of Motor Vehicles (DMVs)
• Internal Revenue Service (IRS)
• Welfare offices

Private Businesses

Businesses can also ask for an SSN. You may be denied service, but you’re not legally required to give your Social Security number to a private business. It’s often necessary if you’re making a transaction that requires IRS notification or is subject to federal Customer Identification Program (CIP) rules. Such businesses include:

• Insurance companies
• Any company requiring a credit application
• Banks, investment companies, and other financial institutions

Employers

While it isn’t illegal for an employer to ask for an SSN on a job application, candidates aren’t legally required to provide it. However, your employer will eventually need an SSN for Social Security deductions and reports.

Why Do Employers Need Social Security Numbers?

The main reason employers need Social Security numbers is to meet IRS requirements. However, they may ask for this identifier earlier in the hiring process for other reasons.

Here are four examples of why an employer may need your SSN:

1. To verify your status as a US citizen or a person who is authorized to work in the US
2. To ensure you are who you say you are and not someone committing identity theft
3. To run a background check for a position that requires one (e.g. in education)
4. To deduct Social Security payments from wages and report Social Security retirement benefits to the IRS

If an employer chooses to ask for SSNs as part of a job application or another reason, they should work with their legal team to create a disclosure that clearly explains:

• Why an SSN is requested
• How an SSN will be used
• What will be done to protect SSNs
• What the consequences are for declining to provide an SSN

From an employee’s or job candidate’s perspective, one reason for not providing their SSN is to protect sensitive information from being misused. Nevertheless, the employer is responsible for keeping collected Social Security numbers protected, as this information is highly sensitive. Systems and processes must be put in place to safeguard this information.

What Is Social Security Number Verification?

Social Security number verification is an application employers can access through the Social Security Number Verification System (SSNVS). It helps businesses confirm employee wages are accurately reported and credited under the correct name and SSN, ensuring the employee’s future eligibility for Social Security benefits.