DECOR notices are issued by the government when the information on an employee’s payroll and working forms is incorrect. Small business owners may receive such notices and not understand what they are. Simply put, the IRS and the Social Security Administration must attempt to make contact with the employee as quickly as possible. If the Social Security Administration cannot reach the employee, the employer will be contacted.
Notices to employers were suspended for two years while new regulation was being passed regarding privacy laws. Because of the potential regulation, notices were not sent between 2007 and 2009. In April of 2011, notices to employers were reinstated and sent to employers for the 2010 tax year. Employers should expect to receive notices for any employee whose information does not match information obtained by the SSA from now on. Employers will not receive notices regarding the tax years for which the DECOR notices to employers were suspended.
Employers are contacted because they must verify and submit the correct employee information for payroll purposes to the SSA and the IRS. If there is a discrepancy, the employer is considered the first contact to verify information. If the information is not verified or there is a discrepancy that is not easily cleared up, the IRS may ask to speak with the employer as well as the employee. To lower the number of notices received, employers should ensure the W-2s have all the necessary information. Checking mailing addresses and verifying Social Security numbers is the first line of defense.
While sending in complete and thoroughly checked W-2s is the easiest way to prevent DECOR notices, human error may still occur. If a notice is received by an employer, the problem can be quickly alleviated by cross-checking the employee information on file with the notice. Typographical errors are the most common cause of such notices and can be fixed by simply submitting the correct information. If all the information matches, the next step is to suggest the employee contact their local SSA office to verify information.
Documenting all correspondence and conversations with the employee in question regarding the issue is prudent. The IRS may need the information to clear up the issue or reach out to the employee. While a notice from the IRS can seem troubling, most cases are fairly simple to resolve.