Counselors Corner

By Michael C. Saqui and Anthony P. Raimondo

Q: I just received a letter from the Department of Treasury requesting wages or income paid and federal income tax withheld for one of my employees. The letter says the Department of Treasury is authorized to make the request under Internal Revenue Code §6103(k)(6) and Treasury Regulation 301.7602-1. Should I provide all of the information requested like the letter asks?

A: Internal Revenue Code §6103(k)(6) and Treasury Regulation 301.7602-1 authorizes the IRS to obtain employee’s private information. However, IRC §6103(k)(6) and Treasury Regulation 301.7602-1 does not bestow IRS employees with unlimited power to access an individual’s private information. California employers remain subject to California law with respect to duties they owe their employees and former employees to maintain their private information confidential. California employers may face liability under California law for simply releasing private information without taking precautions to protect the employee’s private information.

In California, the individual’s right to privacy is zealously guarded. The California Constitution Article I, Section 1 gives each citizen an "inalienable right" to pursue and obtain "privacy.” The right to privacy guaranteed under the California Constitution requires the custodian of records to resist attempts at unauthorized disclosure and any person who is the subject of the attempt has the right to expect that his right will be asserted. California employers are faced with a dilemma when confronted by discovery demands for employee’s confidential information. Courts understand that an uncontested and unwarranted disclosure of such information may expose an employer who releases such information without a court order to potential liability. Accordingly, employers must seek protection of its employees’ confidential information. Therefore, employers should resist the request, but should remain willing to discuss these issues in order to avoid resorting to court. One possible option for employers may be for the IRS to comply with Code of Civil Procedure §1985.6, serving the employers a subpoena of employment records along with a notice to the employee of the request.

COUNSEL TO MANAGEMENT:

Just because a law authorizes the request of information does not mean it requires the production of the information. California employers must seek protection of their employee’s confidential information. Failure to provide protection can result in liability. However, fighting to protect employee’s private information can raise their morale.

Q: We just received a Social Security Card with a Social Security Number that began with a “9”. Is that a valid Social Security Number?

A: The Social Security Administration does not issue Social Security Numbers in the “900” series. The IRS issues Individual Taxpayer Identification Numbers in the 900 series to foreign nationals and other individuals who have Federal tax reporting or filing requirements, but who do not have, and are not eligible to obtain a Social Security Number from the Social Security Administration. An Individual Taxpayer Identification Number is not valid identification outside the tax system.

COUNSEL TO MANAGEMENT:

If you receive a social security card with a “900” series social security number you should ask the employee to check with the local Social Security Administration Office to resolve the issue. Once the employee has contacted the local office, he or she should inform you of any changes. You should correct your records accordingly. If the employee is unable to provide a valid Social Security Number, you should document your efforts to obtain the correct information and keep those documents with payroll records for at least three years. If you cannot contact the employee you should also document your efforts.

The goal of this article is to provide employers with current labor and employment law information. The contents should not be interpreted or construed as legal advice or opinion. For individual responses to questions or concerns regarding any given situation, the reader should consult with Saqui & Raimondo at (831) 443-7100 in Salinas, or (916) 782-8555 in Sacramento.