OFFICE OF
THE INSPECTOR GENERAL

SOCIAL SECURITY ADMINISTRATION

ASSIGNMENT OF
SOCIAL SECURITY NUMBERS
TO J-1 EXCHANGE VISITORS

July 2007

A-08-07-17076

AUDIT REPORT

Mission

By conducting independent and objective audits, evaluations and investigations, we inspire public confidence in the integrity and security of SSA's programs and operations and protect them against fraud, waste and abuse. We provide timely, useful and reliable information and advice to Administration officials, Congress and the public.

Authority

The Inspector General Act created independent audit and investigative units, called the Office of Inspector General (OIG). The mission of the OIG, as spelled out in the Act, is to:

Conduct and supervise independent and objective audits and investigations relating to agency programs and operations.
Promote economy, effectiveness, and efficiency within the agency.
Prevent and detect fraud, waste, and abuse in agency programs and operations.
Review and make recommendations regarding existing and proposed legislation and regulations relating to agency programs and operations.
Keep the agency head and the Congress fully and currently informed of problems in agency programs and operations.

To ensure objectivity, the IG Act empowers the IG with:

Independence to determine what reviews to perform.
Access to all information necessary for the reviews.
Authority to publish findings and recommendations based on the reviews.

Vision

We strive for continual improvement in SSA's programs, operations and management by proactively seeking new ways to prevent and deter fraud, waste and abuse. We commit to integrity and excellence by supporting an environment that provides a valuable public service while encouraging employee development and retention and fostering diversity and innovation.

MEMORANDUM

Date: July 20, 2007

To: The Commissioner

From: Inspector General

Subject: Assignment of Social Security Numbers to J-1 Exchange Visitors (A-08-07-17076)

OBJECTIVE

Our objective was to assess the Social Security Administration's (SSA) process for assigning Social Security numbers (SSN) to J-1 exchange visitors.

BACKGROUND

Through the Exchange Visitor Program, administered by the Department of State, foreign nationals may visit the United States under a J-1 visa to work and travel. The Exchange Visitor Program has 13 program categories. We focused on the camp counselor and summer work/travel categories, the participants of which are generally permitted to stay in the United States for a maximum of 4 months. For purposes of this report, we use the term "exchange visitors" to refer to individuals in these two categories. Designated sponsoring organizations facilitate their entry into the United States to complete their program objectives. At the conclusion of their program, participants are expected to return to their home countries.

Through the summer work/travel program, foreign post secondary students may enter the United States to work and travel during their summer vacations. Participants typically work in non skilled service positions at resorts, hotels, restaurants, and amusement parks. Through the camp counselor program, foreign university students, youth workers, and other specially qualified individuals at least 18 years of age and proficient in English may work as counselors in U.S. summer camps. While SSA data do not identify in which of the 13 J-1 programs SSN applicants entered the United States, we estimated that SSA assigned about 100,000 SSNs in Calendar Year 2005 to exchange visitors in the summer work/travel (75,000 participants) and camp counselor (25,000 participants) categories.

Because exchange visitors are authorized to work in the United States, they are eligible for SSNs. Exchange visitors applying for an original SSN must complete, sign and submit an Application for a Social Security Card (Form SS-5) at an SSA field office and provide acceptable evidence of (1) age, (2) identity, (3) and work authorized immigration status. SSA policy requires that field office personnel verify the exchange visitor's status and immigration information with the Department of Homeland Security (DHS) before completing the SSN application. Wages and other compensation paid to exchange visitors for services performed as an employee are usually subject to tax withholding at the same rates as resident aliens and U.S. citizens. However, exchange visitors are exempt from Social Security taxes.

To accomplish our objective, we reviewed SSA's policies and procedures for assigning original SSNs to exchange visitors and interviewed representatives from SSA's Offices of Public Service and Operations Support and Income Security Programs. We visited six field offices in four regions to discuss their procedures for processing SSN applications from exchange visitors. We also visited selected summer camps and employers in the areas serviced by these field offices and interviewed officials responsible for hiring exchange visitors. Additionally, we contacted several camp organizations and met with representatives of international cultural exchange organizations to obtain their experiences with exchange visitors. To discuss alternative ways of reporting wage and tax information, we interviewed officials from the Internal Revenue Service (IRS). Appendix B includes a detailed description of our scope and methodology.

RESULTS OF REVIEW

Based on our interviews with employers, international cultural exchange organizations, and SSA personnel, we are concerned about SSA's assignment of SSNs to exchange visitors. We question whether exchange visitors who can work and travel in the United States for a maximum of 4 months should be assigned SSNs that are valid for life. In addition, exchange visitors are exempt from Social Security taxes.

While we recognize current law allows exchange visitors to obtain an SSN, we believe this practice creates opportunities for potential SSN misuse. For example, an SSN makes it easier for exchange visitors to remain in the country and continue working after their immigration status expires, which weakens SSN integrity and could affect homeland security. In addition, some exchange visitors leave their employer or return to their home country before receiving their SSN card, thus increasing the potential for dishonest individuals to obtain and misuse these cards. Further, some of the employers and field office personnel with whom we spoke stated that exchange visitors who receive their SSN cards do not always recognize their value and therefore do not adequately safeguard them-often misplacing the cards and requesting replacements. For these reasons, employers, international cultural exchange organizations, and field office personnel we interviewed questioned the assignment of SSNs to exchange visitors and shared our concerns about the potential for SSN misuse and identity theft.

We believe SSA can reduce the risk of SSN misuse by considering alternatives to assigning SSNs to exchange visitors. One alternative could include the potential for the IRS to issue exchange visitors Individual Taxpayer Identification Numbers (ITIN). We recognize any potential alternatives will require changes to existing SSA and IRS policies and may necessitate legislative and regulatory remedies. However, existing policies and regulations should not detract SSA from working with the IRS to explore alternatives to assigning SSNs to exchange visitors while reducing opportunities for SSN misuse. Because the subject of this report involves possible legislative and policy changes for IRS, we plan to share a copy of this report with the U.S. Treasury Inspector General for Tax Administration.
ASSIGNMENT OF SSNs TO EXCHANGE VISITORS CREATES OPPORTUNITIES FOR SSN MISUSE

Some employers, international cultural exchange organizations and camp directors acknowledged that having an SSN makes it easier for exchange visitors to remain in the country and continue working after their immigration status expires. International cultural exchange organization representatives stated that exchange visitors from Eastern European countries are more likely to overstay their visas. In fact, the Government Accountability Office estimated that about one in four exchange visitors it reviewed from a Foreign Service post in the former Soviet Union had potentially overstayed their visas. Furthermore, some employers acknowledged the potential for exchange visitors to use the work/travel program simply as a means of obtaining an SSN. For example, 1 employer told us that 28 of 143 (about 20 percent) exchange visitors hired last summer left shortly after receiving their SSN cards. This example provides evidence of the SSN's importance, especially to noncitizens who plan to overstay their visas or allow others to use their SSNs to work.

Unauthorized work by nonimmigrants weakens SSN integrity and may require that the Agency pay future benefits to these individuals. In addition, nonimmigrants who overstay their authorized periods of admission can potentially affect homeland security because they may obtain employment in sensitive areas, such as airports, hospitals, or mass transit systems.

Some exchange visitors leave their employer or return to their home country before receiving their SSN cards, thus increasing the potential for dishonest individuals to obtain and misuse these cards. Employers, international cultural exchange organizations and camp directors told us they are unsure how to handle these SSN cards. Employers and camp directors told us they forward the SSN cards overseas or to other addresses in the United States, some keep the cards, and some return them to local field offices. The following examples illustrate SSA's exposure to potential SSN misuse.

One employer told us they had about 1,000 SSN cards for exchange visitors who returned to their home country before receiving their cards. The employer told us they typically keep SSN cards for 2 years and then return them to the local field office if the exchange visitor does not return for employment.

An employer showed us a stack of SSN cards they received after exchange visitors had left the employer or returned home. The employer told us they planned to forward these SSN cards overseas or to other addresses in the United States.

One international cultural exchange representative told us he did not know what to do with SSN cards for exchange visitors who had returned to their home country, so he threw the cards in the trash.

We do not believe employers and camp directors should forward SSN cards to foreign countries, keep them for extended periods of time, or throw them in the trash. We encouraged field office personnel to instruct employers and camp directors to return SSN cards to local field offices when they arrive after exchange visitors' departures.

Exchange visitors may create other opportunities for SSN misuse when they receive their SSN cards and do not adequately safeguard them. For example, some employers and camp directors told us it is not unusual for exchange visitors to lose their SSN cards. This problem not only increases the risk of identity theft but may also require that SSA issue replacement cards. Employers and camp directors attributed lost SSN cards to exchange visitors' failure to realize the importance of protecting their cards. Furthermore, some employers, international cultural exchange organizations and camp directors acknowledged the potential for exchange visitors to allow other individuals to use their SSNs to work.

Field office personnel with whom we spoke acknowledged that assignment of SSNs to exchange visitors creates opportunities for SSN misuse. They stated that having an SSN card makes it easier for exchange visitors to remain in the country and continue working after their immigration status expires. They also confirmed that some exchange visitors return to their home countries or leave their employers before receiving their SSN cards, and others lose their cards, which may require that SSA issue replacement SSN cards. These vulnerabilities, coupled with the short time exchange visitors can legally stay in the United States, caused SSA employees to question whether SSA should assign SSNs to exchange visitors.

OPPORTUNITY FOR SSA TO REDUCE ITS RISK OF SSN MISUSE

We believe SSA has an opportunity to reduce the risk of SSN misuse by considering alternatives to assigning SSNs to exchange visitors. We recognize any potential alternatives will require changes to existing law and SSA and IRS policies. However, existing law and regulations should not detract SSA from working with the IRS to explore alternatives to assigning SSNs to exchange visitors while reducing opportunities for SSN misuse.

One alternative could include the potential for the IRS to issue ITINs to exchange visitors. Under current law, ITINs are only used for Federal income tax purposes and are available to individuals who do not qualify for SSNs. Additionally, the IRS generally issues ITINs at the end of the year in conjunction with tax returns. Given the unique status of exchange visitors, we believe SSA could work with the IRS to grant exceptions to such individuals. That is, if SSA stopped assigning SSNs to exchange visitors, the IRS could issue them ITINs and allow employers to report wages under those numbers. SSA, in conjunction with the IRS, should develop a process to identify exchange visitors' earnings to prevent wages from being placed in SSA's Earnings Suspense File.

IRS ITIN program officials told us they believed any obstacles could be remedied by policy and/or legislative changes, thus allowing the IRS to issue ITINs to exchange visitors if SSA stopped assigning them SSNs. Field office personnel recognized the need for SSA and the IRS to work together to develop alternatives to assigning SSNs to exchange visitors.

CONCLUSION AND RECOMMENDATIONS

We question whether exchange visitors who can work and travel in the United States for a maximum of 4 months should be assigned SSNs that are valid for life. In addition, exchange visitors are exempt from Social Security taxes. We recognize SSA cannot address this issue alone. However, we believe SSA should work with the IRS to develop alternatives to assigning SSNs to exchange visitors. Ultimately, the success of SSA's efforts will depend on how successful it is in obtaining assistance and support from the IRS.

Accordingly, we recommend that SSA:

1. Work with the IRS to develop alternatives to assigning SSNs to summer work/travel and camp counselor exchange visitors. This could include the potential for the IRS to issue ITINs to these individuals.

2. Until an alternative to SSN assignment is developed, instruct employers, camp directors, and international cultural exchange organizations to return SSN cards to local field offices when cards arrive after exchange visitors' departure.

AGENCY COMMENTS AND OIG RESPONSE

We believe SSA's response and planned actions adequately address Recommendation 2. However, we believe SSA's response to Recommendation 1 does not effectively address our concern that assignment of SSNs to exchange visitors creates opportunities for potential SSN misuse. Moreover, we question whether exchange visitors who can work and travel in the United States for a maximum of 4 months and are exempt from Social Security taxes should be assigned SSNs that are valid for life. Given SSA's commitment to SSN integrity, we continue to believe the Agency should work with the IRS to develop alternatives to assigning SSNs to summer work/travel and camp counselor exchange visitors.

Regarding SSA's response to Recommendation 1, we acknowledge that we did not identify any specific evidence of fraud, waste or abuse in SSA programs. However, we believe our audit demonstrated that assignment of SSNs to exchange visitors creates opportunities for SSN misuse. As discussed in the report, some exchange visitors may (1) use the work/travel program simply as a means of obtaining an SSN; (2) leave their employer or return to their home country before receiving their SSN card, thus increasing the potential for dishonest individuals to obtain and misuse these cards; and (3) not adequately safeguard SSN cards-often misplacing them and requesting replacements.

These reasons, coupled with the short time exchange visitors can legally stay in the United States, caused camp directors, international cultural exchange organizations, and SSA personnel we interviewed to question the assignment of SSNs to exchange visitors and share our concerns about the potential for SSN misuse and identity theft. In fact, we did not interview anyone during our audit who told us SSA should continue assigning SSNs to exchange visitors. As such, we encourage SSA reconsider its response to Recommendation 1.

SSA also provided technical comments that we considered and incorporated, where appropriate. SSA's comments are included in Appendix C.

Patrick P. O'Carroll, Jr.

Appendices
APPENDIX A - Acronyms
APPENDIX B - Scope and Methodology
APPENDIX C - Agency Comments
APPENDIX D - OIG Contacts and Staff Acknowledgments

Appendix A
Acronyms
C.F.R. Code of Federal Regulations
DHS Department of Homeland Security
ITIN Individual Taxpayer Identification Number
IRS Internal Revenue Service
POMS Program Operations Manual System
SSA Social Security Administration
SSN Social Security Number
U.S.C. United States Code

Appendix B
Scope and Methodology
To achieve our objective, we

Reviewed applicable Federal laws, regulations, and Social Security Administration (SSA) policies and procedures for assigning original Social Security numbers (SSN) to exchange visitors.

Interviewed representatives from SSA's Offices of Public Service and Operations Support and Income Security Programs.

Obtained a data extract from SSA's Modernized Enumeration System Transaction History File for the period April through December 2005, in which we identified and analyzed SSNs assigned to exchange visitors. Field office staff enters SSN applicant information into SSA's Modernized Enumeration System, which includes nonimmigrant classification codes (for example, "J-1.") However, Modernized Enumeration System does not capture the camp counselor or summer work/travel subcategories for SSN applicants. Nevertheless, we searched Modernized Enumeration System text fields for key phrases like "camp," "counselor," or known sponsor organization names. Using the results of this search and information we obtained from our discussions with employers and sponsoring organizations, we estimated the number of J-1 exchange visitors.

Visited six SSA field offices in Massachusetts, Colorado, Nevada, and Florida. We selected these offices because they were among the top offices in terms of processing exchange visitor SSN applications and because of their geographic location. At each field office, we interviewed management and staff about their procedures and experiences with processing exchange visitor SSN applications.

Visited six summer camps in Massachusetts. At each camp, we interviewed responsible officials about the number of camp counselors hired, how and when counselors applied for SSNs, the length of time it took to receive SSN cards, and any problems they had experienced with the program. We also contacted several camp organizations to obtain their experiences with exchange visitors and their efforts to help them obtain SSNs.

Met with international cultural exchange organization representatives to discuss their experiences with exchange visitors.

Visited nine large employers of summer work/travel participants in Alabama, Colorado, Nevada, and Florida and contacted one employer by telephone.

Interviewed Internal Revenue Service Individual Taxpayer Identification Number program officials regarding wage and tax related issues.

Because we were unable to firmly establish a universe of J-1 exchange visitors participating in the camp counselor and summer work/travel programs to whom SSA assigned SSNs, we were unable to select and review a sample of these SSNs and determine whether the individuals (1) earned wages during their programs; (2) continued to earn wages after their programs and visas expired; and (3) appropriately departed the United States and returned to their home countries. As such, our results are based on discussions with knowledgeable employers, organizations and SSA personnel as well our own observations.

The SSA entity reviewed was the Office of the Deputy Commissioner for Operations. We relied primarily on Modernized Enumeration System data to complete our review and determined the data used in the report were sufficiently reliable given the audit objective and use of the data. We conducted our work from August 2006 through March 2007 in accordance with generally accepted government auditing standards.

Appendix C
Agency Comments

MEMORANDUM

Date: July 09, 2007

To: Patrick P. O'Carroll, Jr.
Inspector General

From: David V. Foster
Chief of Staff

Subject: Office of the Inspector General (OIG) OIG Draft Report, "Assignment of Social Security Numbers to J-1 Exchange Visitors" (A-08-07-17076)--INFORMATION

We appreciate OIG's efforts in conducting this review. Our comments on the draft report's content and recommendations are attached.

Please let me know if we can be of further assistance. Staff inquiries may be directed to
Ms. Candace Skurnik, Director, Audit Management and Liaison Staff, at (410) 965-4636.

SSA Response

COMMENTS ON THE OFFICE OF THE INSPECTOR GENERAL (OIG) DRAFT REPORT, "ASSIGNMENT OF SOCIAL SECURITY NUMBERS TO J-1 EXCHANGE VISITORS" (A-08-07-17076)

Thank you for the opportunity to review and comment on the draft report. The Social Security Administration (SSA) appreciates the complexities involved in any discussion regarding the enumeration process for J-1 exchange visitors, specifically the summer work/travel participants and camp counselors who are in the United States for only a short period of time. SSA is required to assign Social Security numbers (SSN) to exchange visitors under the Social Security Act, section 205(c)(2)(B)(i), and regulations, 20 C.F. R. 422.104. We take seriously our responsibility to ensure the integrity of SSNs and to safeguard SSN cards. The policies we have in place are designed to ensure that SSA issues SSN cards only to those individuals who are truly eligible to receive them. Therefore, we are pleased that OIG did not find any evidence that demonstrated either a lack of enforcement of the Social Security Act or immigration laws, nor did OIG identify any fraud, waste or abuse in the administration of SSA programs.

Our comments to the specific recommendations are provided below. We are also providing some technical comments.

Recommendation 1

SSA should work with the Internal Revenue Service (IRS) to develop alternatives to assigning SSNs to summer work/travel and camp counselor exchange visitors. This could include the potential for the IRS to issue Individual Taxpayer Identification numbers (ITIN) to these individuals.

Response

We disagree. We do not believe that we should pursue a significant change in the law and related policies when OIG has not found evidence of fraud, waste or abuse within SSA programs. As noted above, SSA is required to assign SSNs to exchange visitors under the Social Security Act, Section 205(c)(2)(B)(i), and regulations, 20 C.F. R. 422.104.

In addition to the legal requirement to assign SSNs to these individuals, changing the way SSA enumerates individuals under just 2 of the 13 types of possible J-1 exchange visas would create inconsistencies within our policy regarding J-1 visas. Moreover, SSA assigns SSNs for other categories of work-authorized nonimmigrants, some covered by Social Security programs and some noncovered, all of which are eligible for an SSN under current law.

Finally, due to the ongoing immigration reform debate, a piecemeal approach to address the problem of visa overstayers may not be productive. This issue should instead be addressed holistically in the context of the pending immigration reform.

Recommendation 2

Until an alternative to SSN assignment is developed, instruct employers, camp directors, and international cultural exchange organizations to return SSN cards to local field offices when cards arrive after exchange visitors' departure.

Response

We agree. SSA procedures in the Program Operations Manual System (POMS) RM 00201.080 currently address how to handle undeliverable SSN cards. We agree that providing information to employers, camp directors and international cultural exchange organizations about the importance of safeguarding exchange visitors' SSN cards and returning unclaimed cards to SSA offices will minimize opportunities for SSN card misuse. We will add information to POMS within 60 days to alert the field offices to the necessity of communicating this message to employers and camp directors in their local areas. We will also add information addressing this matter to the SSA website and coordinate with the Department of State and the Department of Homeland Security to make this information available to both J-1 exchange visitors and to international cultural exchange organizations.

Appendix D
OIG Contacts and Staff Acknowledgments
OIG Contacts
Kimberly A. Byrd, Director, 205-801-1650
Jeff Pounds, Audit Manager, 205-801-1606
Acknowledgments
In addition to those named above:
Charles Lober, Auditor in Charge

For additional copies of this report, please visit our web site at www.socialsecurity.gov/oig or contact the Office of the Inspector General's Public Affairs Specialist at (410) 965-3218. Refer to Common Identification Number A 08 07 17076.

Overview of the Office of the Inspector General
The Office of the Inspector General (OIG) is comprised of our Office of Investigations (OI), Office of Audit (OA), Office of the Chief Counsel to the Inspector General (OCCIG), and Office of Resource Management (ORM). To ensure compliance with policies and procedures, internal controls, and professional standards, we also have a comprehensive Professional Responsibility and Quality Assurance program.

Office of Audit
OA conducts and/or supervises financial and performance audits of the Social Security Administration's (SSA) programs and operations and makes recommendations to ensure program objectives are achieved effectively and efficiently. Financial audits assess whether SSA's financial statements fairly present SSA's financial position, results of operations, and cash flow. Performance audits review the economy, efficiency, and effectiveness of SSA's programs and operations. OA also conducts short-term management and program evaluations and projects on issues of concern to SSA, Congress, and the general public.

Office of Investigations
OI conducts and coordinates investigative activity related to fraud, waste, abuse, and mismanagement in SSA programs and operations. This includes wrongdoing by applicants, beneficiaries, contractors, third parties, or SSA employees performing their official duties. This office serves as OIG liaison to the Department of Justice on all matters relating to the investigations of SSA programs and personnel. OI also conducts joint investigations with other Federal, State, and local law enforcement agencies.

Office of the Chief Counsel to the Inspector General
OCCIG provides independent legal advice and counsel to the IG on various matters, including statutes, regulations, legislation, and policy directives. OCCIG also advises the IG on investigative procedures and techniques, as well as on legal implications and conclusions to be drawn from audit and investigative material. Finally, OCCIG administers the Civil Monetary Penalty program.

Office of Resource Management
ORM supports OIG by providing information resource management and systems security. ORM also coordinates OIG's budget, procurement, telecommunications, facilities, and human resources. In addition, ORM is the focal point for OIG's strategic planning function and the development and implementation of performance measures required by the Government Performance and Results Act of 1993.