A Social Security number (SSN) is a unique identification assigned to U.S. citizens and other residents by the Social Security Administration (SSA). The SSN associated with an individual's SSA account  helps accurately identify and record Social Security wages  (employee and/or self-employment income) and determine benefit eligibility.

Today's SSNs are assigned randomly, but older numbers followed a different system. Until 2011, when  SSN randomization  took effect, certain parts of the number had a special significance. Randomly issuing SSNs better protects a person's identity and allows SSA to extend the life of the current system.

A Social Security number consists of nine digits, separated into three parts by a hyphen (such as XXX-XX-XXXX). Here  is a description of the SSN formula  as it was originally designed:

• Area number:  These first three digits represented the area number of each state or territory (with some exceptions).
• Group Number:  The middle two digits were used to indicate the number groups assigned to the state's post offices.
• Serial number:  The last four digits represent a numerical series within each group.

Government agencies and private businesses may ask for your Social Security number in a number of scenarios. However, you can ask how it will be used and whether it is required by law or whether submitting your SSN is voluntary. In some cases, you may be   allowed to provide an alternate form of identification, such as a passport, driver's license or employer identification number (EIN) .

government agencies

The SSN serves as a key identifier for federal, state, and local government agencies. For example,  the following entities  have the legal right to ask for your SSN:

• Department of Motor Vehicles (DMV)
• Internal Revenue Service (IRS)
• welfare office

Private business

Businesses may also ask for an SSN. You may be denied service, but you are not legally required to give your Social Security number to a private business. It is often required if you are conducting a transaction that requires IRS notification or is subject to federal  Customer Identification Program (CIP) rules  . Such businesses include:

• Insurance Company
• Any company requiring a loan application
• Banks, investment companies and other financial institutions

Employers

While it is not illegal for an employer to ask for an SSN on a job application, candidates are not legally required to provide it. However, your employer will eventually need the SSN for Social Security deductions and reporting.

The main reason employers need a Social Security number is to meet IRS requirements. However, they may ask for this identifier earlier in the hiring process for other reasons.

Here are four examples of why an employer might need your SSN:

1. To verify your status as a US citizen or person authorized to work in the US
2. To make sure you are who you say you are and not someone who is committing identity theft
3. Conducting a background check for a position that requires it (such as in education)
4. Deducting Social Security payments from wages and reporting Social Security retirement benefits to the IRS

If an employer wants to ask for an SSN as part of a job application or for another reason, they should work with their legal team to prepare a disclosure that clearly states:

• Why the SSN is requested
• How the SSN will be used
• What will be done to protect SSN?
• What are the consequences of refusing to provide SSN

From an employee or job candidate's perspective, one reason not to give out your SSN is to protect sensitive information from being misused. Nevertheless, the employer is responsible for safeguarding the Social Security numbers collected, as this information is highly sensitive. Systems and procedures must be put in place to protect this information.

Social Security Number Verification is an application that employers  can access through the Social Security Number Verification System (SSNVS)  . It helps businesses confirm that employee wages are correctly reported and deposited under the correct name and SSN, ensuring the employee's future eligibility for Social Security benefits.