Basic steps for I-9 and withholding compliance
Even small nonprofits need to make sure they comply with federal employment laws. Here's what your nonprofit needs to know about filing, retaining and storing I-9 and withholding forms.
What is the I-9 form?
The I-9 form is used to verify the identity and employment authorization of anyone hired in the United States, as long as the person works for pay or other type of compensation. An I-9 form is required for both citizens and noncitizens.
The I-9 form includes an employer section and an employee section, both of which must be completed within three business days of the date employment begins.
In the employee section, your employee must attest to his or her employment authorization and present supporting documents to establish identity and employment authorization. Examples include a current:
- U.S. passport or U.S. passport card
- Permanent resident card
- Foreign passport that contains a temporary I-551 stamp
It's up to your nonprofit to examine the employment eligibility and identity documents to make sure they're acceptable and genuine.
How does E-Verify support the review of I-9 data?
E-Verify is an online system that confirms employment eligibility by comparing information from an employee's I-9 form to data from U.S. Department of Homeland Security and Social Security Administration records. The system is free and helps deter document and identity theft. While some employers are required to participate in E-Verify (such as those who have a participation clause in federal contracts or subcontracts), most employers participate voluntarily.
If the I-9 information matches the federal records, the case will get an "employment authorized" result almost immediately and your new employee will be authorized to work. If the information doesn't match, the case will be given a "tentative non-confirmation" result. Share this information with your new employee in private and give him or her the opportunity to take action to correct his or her records. You may fire the employee if he or she decides not to contest the tentative non-confirmation or if he or she is given a final non-confirmation.
If you participate in E-Verify, you must post a notice of participation and a right to work poster at your organization's hiring location (available here, after logging in to E-Verify). If you're not able to display these posters, provide copies along with your job applications.
Although E-Verify is a useful tool for validating information provided by an employee on an I-9 form, remember that it isn't a replacement for properly completing an I-9 form.
How long should I-9 forms be retained and how?
Retain an employee's I-9 form for three years after his or her hire date or for one year after the employment ends — whichever is later. You must also make I-9 forms available for inspection by authorized government officials within three days of the request.
I-9 forms may be stored on paper, microfilm, microfiche or electronically. Use safeguards to prevent unauthorized access to the forms, which contain your employees' personal information.
To facilitate an inspection request, I-9 forms should be kept separate from other personnel records (which may contain confidential information). You might also divide I-9 forms by active and terminated employees.
When the retention period has ended, be careful to erase, shred or otherwise destroy I-9 forms so that the information can't be read or reconstructed.
What employee withholding forms are needed?
Another important federal employment form new employees need to fill out is the W-4. The W-4 ensures that your organization withholds the correct federal income tax from the employee's pay.
What are the best practices for retention of employee withholding forms and other payroll records?
In general, keep all records of employment taxes for at least 4 years after filing the year's 4th quarter taxes (or longer, if required by state law).
These records include:
- Basic details. These include your nonprofit's employer identification number and the names, addresses, social security numbers and occupations of employees. Note the dates of employment and the dates and amounts of tax deposits made by your nonprofit.
- Wage information. This includes amounts and dates of all wage, annuity and pension payments. Also include reported tips, the fair market value of in-kind wages paid, records of allocated tips and records of fringe benefits provided.
- Certain copies. This includes any employee copies of Form W-2 that were returned to your nonprofit as undeliverable. Also keep copies of your employees' income tax withholding allowance certificates, such as the W-4, and copies of returns filed.
- Other notes. This includes periods for which employees were paid while absent due to illness or injury, as well as the amount and weekly rate of payments your nonprofit or third-party payers made to the employees.
These records may be kept in paper or electronic format. An electronic record must identify the source document and W-4s must be printable and legible for IRS review.
As with I-9 forms, be careful to erase, shred or otherwise destroy withholding forms when the retention period has ended.
This article draws on the expertise of Grace Davies, a Minneapolis-based attorney with special interest in product liability, medical malpractice and employment discrimination.
Minnesota Society of Certified Public Accountants: Employee record retention and destruction issues by Larry Morgan (2015)
Society for Human Resource Management: Reminder: E-verify users must still fill out I-9 forms by Roy Maurer (2016)
U.S. Citizenship and Immigration Services: Who needs the Form I-9? (2016)
U.S. Citizenship and Immigration Services: Retaining Form I-9 (2016)
U.S. Citizenship and Immigration Services: Storing Form I-9 (2016)
U.S. Citizenship and Immigration Services: What is E-Verify? (2016)
U.S. Citizenship and Immigration Services: I-9 employment eligibility verification (2013)
U.S. Citizenship and Immigration Services: E-Verify overview (2016)
IRS: Employment tax recordkeeping (2016)
The Houston Chronicle: Federal guidelines for retention of employee W-4s by Kathryn Hatter