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@Taxed preparer 66 wrote:

Social Security Cards marked Not Valid For Employment were commonly issued years ago to facilitate payment of social Services,Welfare, benefits for undocumented aliens primarily medical benefits.

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Since the 1970's, SSN's are issued, by law, only to US citizens and aliens who are legally admitted.  Undocumented aliens were not eligible for SSN's.

Before the introduction of ITIN, legally admitted aliens, including those with temporary visas such as students and dependents of employment visa holders, were eligible for SSN.  From January 1996, the SSA started restricting the issuance of SSN to these aliens only if they are green card holders, employment visa holders, or have a valid nonwork reason to be issued one.

There are two different notations for aliens who are not otherwise authorized for employment:

• NOT VALID FOR EMPLOYMENT
• NOT VALID FOR EMPLOYMENT WITHOUT AUTHORIZATION

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The reason you receive w2s with these numbers is the Employer is not verifying the social secrity number at the time of employment as required by law.

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This is not about illegal use of real SSN's of others by undocumented aliens. As Lisa pointed out, it is a widespread and recognized issue.  Nevertheless, it is a different problem unrelated to EIP.

This is mostly about taxpayers, who were issued SSN's when they were not authorized to work (e.g. as a student years ago or as dependents of employment visa holders), not having updated their records with the SSA after gaining authorization for employment (e.g. as employment visa or green card holders).

Employers of these legally admitted aliens would have gone through an elaborate process to validate their eligibility for employment (and, in some cases, for the sponsorship of their visas) but none of these involve updating the SSA's records, which the individuals must undertake separately.