One Firm Filed 33,448 Bad W-2s
Every year the Social Security Administration consigns up to nine million hopelessly inaccurate W-2 reports to a Social Security limbo.
It is called the Earnings Suspense File (ESF), and it is the final resting place of W-2s that cannot be matched to a known taxpayer. Some, for example, have no Social Security Number. Others have a Social Security number never issued by the government. Between 1985-2000, 3.5 million of the W-2s landing in the ESF file had a Social Security Number that was used for multiple workers by the same employer in the same year.
Citing competing demands for DHS resources in a post-9/11 world, GAO says, "At present, it is unlikely that DHS will take enforcement action against employers and workers who submit inaccurate information to SSA to conceal unauthorized work activity."
This is where the solution proposed by Rep King, the one that Lars talks about a lot, comes into play. You submit documents where the social doesn't match the name, the social doesn't exist, or the social has multiple users then you don't get to deduct that employees wages as a bussiness expense.
The information already exists to use this solution, no new laws need to be passed, just enforce the ones we currently have. An illegal alien is not allowed to work in this country. That's it.