How Your Social Security Number Is Used

Article excerpt

The increasing demand for personal information in our society is tough to ignore. Much of this helps the wheels of commerce (and government) turn, allowing for the speed of many of our routine financial transactions and purchases. But there is serious concern that the resulting side-effects have not been fully appreciated, as with the widespread use of Social Security numbers. The following article, drawn from a recent General Accounting Office report,(*) looks at just how this single number can become the key to numerous aspects of our lives. --Ed.

Over the years, the Social Security number (SSN) has come to be viewed by many as a national identifier because almost every American has a SSN, and each is unique. The Social Security Administration estimates that about 277 million individuals currently have SSNs. Furthermore, the boom in computer technology over the past several decades has prompted private businesses and government agencies to rely on SSNs as a way to accumulate and identify information in their databases. Simply stated, the uniqueness and broad applicability of the SSN have made it the identifier of choice for government agencies and private businesses, both for compliance with federal requirements and for the agencies' and businesses' own purposes.

No federal law regulates overall use of SSNs. However, a number of federal laws and regulations enacted since the 1960s require certain programs and federally funded activities to use the SSN for administrative purposes. These laws and regulations generally limit the use of the SSN to the required purpose by explicitly prohibiting other uses or disclosures. Federal law neither requires nor prohibits many of the public and private sectors' other uses of SSNs.

Federal Laws and Regulations Require SSN Use in Some Public Programs. A number of federal laws and regulations require the use of the SSN as an individual's identifier to facilitate automated exchanges that help administrators enforce compliance with federal laws, determine eligibility for benefits, or both. The Internal Revenue Code and regulations, which govern the administration of the federal personal income tax program, require that individuals' SSNs serve as taxpayer identification numbers.

This means that employers and others making payments to individuals must include the individuals' SSNs in reporting to IRS many of these payments. Reportable payments include interest payments to customers, wages paid to employees, dividends provided to stockholders, and retirement benefits paid to individuals. Other reportable transactions include purchases involving more than $10,000 in cash, such as the purchase of an automobile or a boat, or mortgage interest payments totaling more than $600. In addition, the Code and regulations require individuals filing personal income tax returns to include their SSNs as their taxpayer identification number, the SSNs of people whom they claim as dependents, and the SSNs of former spouses to whom they paid alimony. Using the SSNs, IRS matches the information supplied by entities reporting payments or other transactions with returns filed by taxpayers to monitor individuals' compliance with federal income tax laws. A number of federal laws require program administrators to use SSNs in determining applicants' eligibility for federally funded benefits.

Another federal law that requires the use of SSNs to identify individuals is the Commercial Motor Vehicle Safety Act of 1986. This law established the Commercial Driver's License Information System (CDLIS), a nationwide database. States are required to use individuals' SSNs to search this database for other state-issued licenses commercial drivers may hold. This checking is necessary because commercial drivers are limited to owning one state-issued driver's license. If a state grants a license, the state is required to record the license information, including the driver's SSN, in the CDLIS. …