Taxation and Finance asking SSN for my ex employee, I have no records or contact info, am I in trouble?

Question

I have a small business and I hired a foreigner guy in May.

He said he was in process of getting SSN, which would take a couple of weeks.

He was put on our payroll without SSN, received 1 check for $600 with blank SSN, and then he said he can't make it and he quit.

What happened is that, our accountant sent the quarterly wage reporting papers to tax office, and tax office sent me a letter asking SSN of this guy.

He was terminated and was removed from the payroll after 1 week, but as he received a paycheck, I assume Tax office wants to know the SSN.

I can't reach this guy and don't know his details of course.

How should I response to this letter? The letter has a coupon with the blank SSN line with the employee's name and a prepaid envelope to send it back.

I'm thinking of adding a letter saying "this person was terminated and never provided a SSN" or something like that. What do you think?

Will I receive any fines for this?

P.S. This is not a letter from SSA, INS, IRS etc. It's coming from Taxation and Finance of NYC, and it says missing info on "Wage Reporting"

Thank you for your replies

Answer 1

You're supposed to verify his information before you employ him.  Further, you're supposed to have copies on file.  An example of legal copies would be a photo copy of both his drivers license and social security card.  Second example, is copy of passport.  You didn't document anything, and you rely on the idea that less than 600 is reportable as casual labor.  Good luck, you may need it.

Answer 2

The withholding rate for a foreginer for US-source income is 30%.  the IRS may request that you pay that.  

Answer 3

Don't worry too much.  You may be required to pay the 30% w/h, bc the person did not have a SSN.  As long as the person was a 1099 and you didn't take out federal income, ss & medicare taxes you should only receive a penalty if you are a corp. However, don't fret too much, the IRS has much bigger fish to fry than one person that didn't grab a SSN on $600.  In the future I would be sure to get SSN's so that you can send a 1099, or only pay $599, so that they can be considered "contract labor" and not be given a 1099, just in case you have another person run off.  (FYI: in the future when you don't hire until they have a SSN, the IRS gives lots of forms on its website "IRS.gov" including a W-4 that allows you to get vital info, and then you can verify SSN on the Social Security website, this allows you to be sure that the SSN you have is correct before you rush to your acct w/the info on the last day!)  But, all in all, you may have to pay a little money (which is worse than not paying) but don't expect to have to go to jail or anything!  Most of the time, you can ask for forgiveness in a polite way and you will be forgiven!